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Slovenian economy grows in last months of 2013 after lengthy decline
February 28, 2014 / 10:56 AM / 4 years ago

Slovenian economy grows in last months of 2013 after lengthy decline

LJUBLJANA, Feb 28 (Reuters) - Slovenia’s economy grew 2.1 percent in year-on-year in the last three months of 2013, data showed on Friday, after the country narrowly avoided asking its euro zone peers for a bailout in December.

It was the first quarter of growth in the ex-Yugoslav republic after a run of eight quarterly declines.

Gross domestic product (GDP) fell 1.1 percent in 2013 over 2012. But in the last quarter of 2013, GDP rose 1.2 percent from the previous quarter.

The government has overhauled the largely state-owned banking sector by pumping 3.3 billion euros ($4.5 billion) into troubled local banks and cleaned up bad loans worth nearly 8 billion euros, almost a quarter of national output.

“GDP data in the last quarter of 2013 are encouraging and mostly a consequence of a significant rebound in gross investments and better private consumption data,” said Saso Stanovnik, chief economist at investment firm Alta Invest.

“Partially this can be explained by low base, especially since gross investments have been falling for several years. It seems sentiment is improving as the banking mess is starting to be resolved while export activity remains supportive,” he added.

The statistics office said the main contributor to the growth was gross capital formation which rose 5.9 percent. Domestic consumption rose 3 percent while exports increased 3.7 percent, slightly less than in the previous quarter.

The government plans to sell more than a dozen state-controlled firms including Telekom, the top national telecommunications group, the Ljubljana airport, flag carrier Adria Airways and No.2 bank NKBM. It has sold two smaller companies since October.

The IMF said it expects Slovenia’s national output to shrink 1.1 percent in 2014, less than previously feared, as the government tries to cut spending and reform an economy which is still 50 percent in state hands. The government’s macroeconomic institute forecasts a 0.8 percent decline.

Hailed as a trailblazer for ex-Communist Eastern Europe, Slovenia - which nestles between Croatia, Italy and Austria - joined the European Union in 2004 and adopted the euro in 2007.

It was the euro zone’s fastest growing economy that year but the global financial crisis a year later crippled exports, mostly to EU markets, and left it in recession, with only a brief recovery in 2011. ($1 = 0.7309 euros) (Reporting by Maja Zuvela in Sarajevo and Almir Demirovic in Ljubljana, edited by Igor Ilic and Ruth Pitchford)

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