Slovene May export, industry fall eases; still no recovery

* May export down by 23.2 pct y/y

* May industrial output down by 19.8 pct y/y

* Biggest textile firm facing bankruptcy

By Marja Novak

LJUBLJANA, July 10 (Reuters) - The fall of exports and industrial output in euro zone member Slovenia eased in May, but analysts said no recovery was in sight while economy could shrink by more than 4 percent as expected by the government.

Exports fell by 23.2 percent year-on-year compared to a fall of 29.7 percent in April, the statistics office reported on Friday.

Industrial output was down by 19.8 percent year-on-year versus a fall of 24.9 percent a month before while it rose 2.9 percent on a monthly basis, which is the biggest rise this year.

"It was expected that a free fall will stop at some point but we cannot be sure that this is the bottom yet," Igor Masten of the Ljubljana's Faculty of Economy told Reuters, adding Slovenia's recovery will follow a recovery in Germany which is its main trading partner.

He added the government should undertake a number of reforms to ensure Slovenia's competitiveness in the future, like industry restructuring, increasing flexibility of the labour market and pension reform.

Peter Stanovnik of the Institute of Economic Research in Ljubljana said the figures show that Slovenia's gross domestic product (GDP) could this year shrink by more than 4 percent as forecast by the government.

"It looks like the government's forecast for this year is too optimistic but I do expect a small economic growth in Slovenia next year," Stanovnik said.

Last month the Organisation for Economic Cooperation and Development (OECD) said Slovenia's economy will contract by 5.8 percent in 2009, while credit rating agency D&B sees a contraction of 7 percent.

Slovenia, which was the fastest growing euro zone member over the past two years, was badly hit by the global crisis mainly because of its dependency on exports.The country sells about 70 percent of its production abroad, mostly to other EU states.

This week Slovenia's largest textile producer Mura, which exports some 53 percent of its production to Germany and has been operating with a loss for several years, said it is facing bankruptcy that could leave its 3,300 employees out of work.

Last week 1,020 employees of the country's top household appliances maker Gorenje (GORE.LJ) were temporary laid-off due to lack of orders. Gorenje group has some 11,000 employees and plans to reduce the number by 5 percent this year.