1. Summary. On 13 November, Maja Bednas, Deputy Director of
the GoS think-tank the Institute for Macroeconomic Analysis
and Development (IMAD),presented a disheartening account of
the impact of the global financial crisis on Slovenia.
Bednas gave specific forecast numbers for Slovenia, focusing
on how IMAD revised each of those numbers downwards. 2009
GDP growth has now been lowered to 3.1%, down from 6.8% in


2007. She stressed the prospects for 2009 are worsening and
that the 3.1% was already being revised and would definitely
be lowered further as the global recession impacts Slovenia's
major trading partners. Hardest hit will be durable goods
exporters as demand dries up and SMEs who are finding it
harder to secure capital from banks. The incoming government
will likely have to revise the 2009 budget to factor in lower
growth and decreased budget revenues, and may end up with a
deficit instead of the earlier-predicted surplus.
Unemployment is not expected to rise significantly because
job cuts will mostly hit foreign workers who are expected to
return to their home countries. End Summary.



2. Bednas presented a pessimistic outlook for 2009. IMAD
revised real growth in GDP for 2009 downward from its March
2008 prediction of 4.1% to a September 2008 prediction of
3.1% (down from a 2007 GDP growth rate of 6.8%). Exports of
goods and services in 2009 are now expected to grow at 3.1%,
revised downwards from a March 2008 estimate of 9.4% (and
down from the 2007 growth rate of 13.8%). 2009 projected
import growth was reduced from 7.5% in March to 5.2% in
September (down from 15.7% in 2007). However, both private
and government consumption growth rates remained fairly
stable. Government consumption will grow at 2.2% (down from
just 2.5% in 2007) and private consumption will grow at 3.5%,
revised down 0.2% since March (from 5.0% in 2007.)



3. According to Bednas, each week the numbers look worse.
She said the 3.1% figure for GDP growth was already assumed
to be too high and would be lowered further. The slowdown in
Slovenia's most important export markets, especially Germany,
will continue to negatively affect Slovenia. She explained
that all of Slovenia's major trading partners will experience
recession, which will hit Slovenia's export companies hard,
especially companies producing durable goods such as car
parts and household appliances. However, all export sectors
will be affected. Previously Slovenia had considered the
former Yugoslavia and Eastern Europe as buffer markets, but
the situation there is much worse than thought in September.



4. Bednas noted that Slovenian banks are still giving loans
but on worse terms. The hardest hit are SMEs, which are
experiencing problems financing investment in current
operations. Construction companies are also having
difficulties getting loans.



5. Bednas speculated that the current financial crisis will
have budget implications for Slovenia. Slovenia adopted its
2009 budget in the fall of 2007, when growth was predicted to
be 4.1%. This would have resulted in a small budget surplus.
Now with the worsening of economic conditions, decreased
budget revenues and higher expenditures, as well as
social-spending measures in the coalition agreement that
forms the basis for the incoming government, there will be
greater pressure on the budget. Bednas could not predict
what the budget deficit would be, but opined that the new
government would have to revise the 2009 budget due to
worsening economic conditions.



6. Although Bednas noted that the unemployment number would
rise, a large part of the affected would be temporary
employees, notably in the construction sector. There are
87,000 foreign workers in Slovenia, and these workers are
likely to return to their home country when the jobs
disappear, thereby reducing the impact on Slovenia's overall
unemployment rate.
GHAFARI