2012-12-14 14:54:12 - Slovenia Business Forecast Report Q1 2013 - a new country guide report on companiesandmarkets.com
We maintain that Slovenia will need an emergency bailout given the dire state of the domestic banking sector. We also forecast the government will miss its fiscal deficit target of 2.9% of GDP in 2013 and forecast the deficit at 3.4% of GDP following a 4.3% shortfall in 2012.
Slovenian consumer price inflation has fallen to 2.7% y-o-y in October after spiking at 3.3% in September and we forecast the rate to fall to a 2.4% by end-2012. This view is supported by our negative growth predictions for 2012, falling oil and gas prices and public sector reforms, which are all likely to drive inflation down.
Major Forecast Changes
We have revised down our real GDP growth forecasts for 2012 and 2013 to
-1.8% and -0.7% from -1.0% and 1.0% respectively in our last quarterly report. This comes as a result of weaker than expected domestic demand in the first half of 2012 and our belief that the government will request a bailout in 2013.
Risks To Outlook
The biggest risk to the Slovenian economy lies abroad. A major deterioration in the eurozone sovereign debt crisis, or even a greaterthan- expected slowdown in the core eurozone nations, would have severe knock-on effects on the Slovenian economy, not only via depressed trade and investment flows, but also via credit channels and broader economic sentiment.
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