Authors: Andreja Rednak, Teja Grapulin
In February, Slovenia’s Business Climate Index rose by one percentage point to settle at 4.1 points. This is the most optimistic assessment since September 2008. We asked some Slovenian business representatives to share their thoughts on the issue.
The Slovenian Statistics Office is measuring business climate and confidence on the basis of surveys among managers in manufacturing, retail, services and construction, surveys of consumer opinion are also being taken into account. Business representatives are answering questions about business activity, sales, production, demand, orders and stocks, whereas consumers are being asked about unemployment, savings and their expected household financial situation.
Confidence indicator up by 13 points year-on-year
In February, according to seasonally adjusted data, the economic climate compared to the previous month increased by a good point, to 4.1 points; in comparison to February last year, it was as much as 13 points higher. In the best of times, before the crisis (in 2006 and 2007), the business climate indicator reached about 15, even 16 points; in the most difficult of times (in 2009), it declined even to -34 points. The Slovenian Statistics Office indicator has been measured since 2005; the average monthly index value for the whole period was -3.9 points.
IMAD: In line with forecast of further economic recovery
There is certainly still some room for growing confidence in the economy. But is the current optimism justifiable, or is it a bit excessive, given the economic and political situation in Europe?
Boštjan Vasle, head of the Institute of Macroeconomic Analysis and Development of the Republic of Slovenia (IMAD), isn’t worried: “The business climate indicator has been rising for a long time, which is according to IMAD primarily a reflection of the improvement of economic activity, we are witnessing in the domestic environment and in our main trading partners. The improvement in the business climate in the first months of this year is in line with the IMAD forecast of further economic recovery this year.”
Monthly retail trade index slightly lower
In February, processing industries confidence index has increased by one percentage point; it is now 5 points higher than a year ago and 8 points above the ten-year average. According to Statistics Office, the estimates for the next three months are better, except on the assured production.
At the monthly level, the retail trade index is slightly lower (-4 points), but that is still 19 points higher than February last year and 9 points above the ten-year average. Compared to the previous month, assessments of the current business situation and sales fell slightly, whereas assessments of stocks and selling prices rose. Indicators are generally better for the next three months.
In construction, confidence increased 2 percentage points compared to January and 8 points compared to last February; the index was also 12 points higher than the long-term average. As regards the current situation in the companies, there is a rise of employment and orders indicators, the rest are lower; at the same time, there is an increase in all indicators for the next three months, except price expectations.
Confidence index for the services sector was higher by 4points, which is 23 points better than a year ago and nine points better than the long-term average.
Last year, the real economic growth in Slovenia was 2.6%. This year, the European Commission (EC) predicts 1.8% growth, while the International Monetary Fund (IMF) spoke about 1.9%; for the next year, EC expects it to be 2.3%, IMF – 1.7%. European Commission believes growth will be driven mostly by exports and European funds, while the IMF is warning that GDP is still below pre-crisis level, in addition, unemployment remains high.
POLL: Economy has become accustomed to difficult times; all that is needed now is stable environment and some more sunny days
Blaž Miklavčič, GH Holding:
“Positive indicators for the construction industry have been expected, but the sector is still far from being consolidated. It is in the final stage of purification, those who have nothing to do in it are withdrawing, so things have settled, including in the financial sector. Company’s realization has shrunk to only a third of what it was in 2008. This year, on the top of the list of priorities is finalization of European projects, so investors are imposing huge pressure to finalize the projects. With all the announced big infrastructure projects, that will or will not happen, I believe that Slovenian construction companies are capable of doing a good job. I am not afraid of the competitiveness of the foreign contractors.”
Aleša Kandus, Medex:
“The economic situation is becoming more stable, there is more calmness in society. At the same time, Mercator has new owners, so that’s the end of that story. We all know that it is necessary to work hard to be successful. The worst is not knowing what awaits you. Now we all know where we stand. Another important event last year was selling of Tušmobil. Again, pointing to greater stability, in short, some encouraging shifts have taken place, and that gives confidence. In addition, I think we all realized that whining makes no sense, what counts is good work. In short, I am optimistic about the next three months. Regarding the results of the last months, we are satisfied. Despite the complexity of the environment.”
Samo Kupljen, Bauhaus:
“Last year’s February was great for our shops; due to sleet and freezing rain we had huge turnover selling electric generators and ovens. But nevertheless, we can be satisfied with this year’s February, too. Consumption is no longer declining, although there are still few capital maintenance purchases, with repairs being in foreground. The mood among consumers definitely improved, so I expect this year to be better. For example, if I compare our situation with that in Croatia, where we also have shops, Slovenes are not as heavily indebted as the Croatian consumers. Money is there, we only have to mobilize it. But we will, of course, not mobilize it without stable development policy and politics in general.”
Mitja Sojer, Mič Styling:
“For hairdressing business last year’s February was catastrophic. Bad weather drove away costumers. This year, the weather is much better; we have had quite a few nice sunny days, which had a positive impact on turnover growth. Weather is very important in our business. February is also the time of school holidays, which means, that business is slightly worse. Generally, I can tell that there is much more optimism among people and it seems, this year will be much better. I think we all got used to the crisis. Now is the time, for every hairdresser salon, as well as for any other company, to look at things differently, allocate differently.”
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