Bloomberg News

Slovenian Economic Growth Slowed in Third Quarter, Survey Shows

November 29, 2011

Nov. 29 (Bloomberg) -- Slovenia’s economic growth slowed in the third quarter as export gains failed to offset a drop in investments, a survey of economists showed.

Gross domestic product grew 0.8 percent from a year earlier, compared with 0.9 percent in the second quarter, according to the median estimate of seven economists in a Bloomberg survey. The statistics office in the capital Ljubljana will publish the report at 10:30 a.m. local time tomorrow.

“Negative impact can be expected from investments and personal consumption, while net exports will be the only positive contribution,” Bojan Ivanc, an analyst at Ljubljana- based KD Bank d.d., said in an e-mail today.

Faced with increased borrowing costs, Slovenia’s export- driven economy will probably slide into a recession, Finance Minister Franc Krizanic has said. Demand for Slovenian products in Europe is waning as the two-year-old debt crisis crimps confidence among households and companies.

Europe, where Slovenia sends about two-thirds of all exported goods, may also enter a “deep recession,” Capital Economics in London said in a report today.

GDP will expand 1 percent this year and slow to a 0.3 percent pace in 2012, the Paris-based Organization for Economic Cooperation and Development said in a report yesterday. The central bank, which in October forecast 2011 growth at 1.3 percent, said risks from Europe’s debt crisis may jeopardize the estimate.

Construction Woes

The building industry is weighing on growth as the value of construction works in the country dropped more than 20 percent in the third quarter from a year earlier, according to Goran Saravanja, chief economist at Zagrebacka Banka d.d. in Zagreb. The industry is denting earnings at Slovenian banks, which are putting aside record loan-loss provisions.

Nova Kreditna Banka Maribor d.d., the nation’s second- biggest lender by assets, reported its first loss since it sold shares in 2007 on mounting provisions for bad loans. The bank’s nine-month net loss was 4.4 million euros ($5.9 million), compared with a 20.3 million-euro profit a year ago. Nova Ljubljanska Banka d.d. posted a loss of 96.3 million euros in the third quarter.

Moody’s Investors Service has warned both lenders, in which the government has majority stakes, that their debt ratings may be downgraded due to a possible removal of state support.

--Editors: Jennifer M. Freedman, Andrew Langley

To contact the reporter on this story: Boris Cerni in Ljubljana, Slovenia at bcerni@bloomberg.net

To contact the editor responsible for this story: James Gomez at jagomez@bloomberg.net


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