March 12, 2020 / 1:59 PM / 16 days ago

UPDATE 1-Slovenia cuts GDP growth forecasts for 2020 and 2021

(Updates with quote, details)

LJUBLJANA, March 12 (Reuters) - Slovenia has cut its gross domestic product growth forecast for 2020 to 1.5% from the 3% it forecast in September, the government’s macroeconomic institute UMAR said on Thursday.

The country also cut its forecast for 2021 growth, to 2.2% from the 2.7% projected in September. The changes were largely down to the economic effects of the spread of the coronavirus.

“The slowdown this year ... is mainly influenced by lower growth in foreign demand, which is more and more influenced by the major uncertainty regarding the consequences of the spread of the coronavirus,” the institute said in a report.

It said the 2020 forecast assumed that conditions would stabilise in the second half of the year, adding that growth could be “significantly” below the new forecast if the virus epidemic persisted.

The institute expects export growth of 2.4% this year and 4.2% in 2021, versus 4.4% last year. Slovenia exports more than 80% of the goods it produces, mostly to other EU states. Its main exports include cars, car parts, pharmaceutical products and household appliances.

Growth in household spending is also slowing down and is expected to rise by 2% in 2020 and 1.7% in 2021 compared with 2.7% last year, according to the institute.

Annual average inflation is forecast at 1.7% this year and 2.2% in 2021, up from 1.6% in 2019.

Slovenia has confirmed 82 coronavirus cases so far and will close all schools on Monday to limit the spread of the COVID-19 disease. It has limited the number of border crossings with Italy and introduced health checks there. (Reporting by Marja Novak; Editing by Jason Neely and Pravin Char)

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