2013-12-23 19:32:40 - Fast Market Research recommends "Slovenia Freight Transport Report 2014" from Business Monitor International, now available
Despite a 3% drop year-on-year (y-o-y) in June, Slovenian exports continued to expand in 2013, reaching 1.5% growth for H1 2013 compared with the same period last year. This provides welcome news to the country's freight industry following a very choppy 2012 in terms of tonnage growth. Most notable was the 6% y-o-y drop in imports in June, supporting our view for a widening current account surplus for 2013. The latest data, released in September for the month of July, show this trend continuing, with a 7% increase in exports compared with July 2012 and a more modest 2.8% increase in imports.
While exports of goods remain the leading driver of Slovenia's trade picture, exports of services are performing even better,
with a 3.1% y-o-y increase over the first seven months of the year. At the same time, imports of foreign services fell by 3.9% y-o-y over the same period.
Full Report Details at
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We expect domestic demand to continue receding for the next quarters. The uncertainty surrounding the banking sector, along with large government spending cuts and tax hikes will put a drag on Slovenian's purchasing power and willingness to consume. Slumping imports will continue to be offset by rapid growth in exports as the country becomes relatively more competitive than its neighbours.
In 2014, the freight industry's outperformer in Slovenia in y-o-y tonnage handled terms is set to be air freight once again. Rail and road freight growth will be negligible this year, while the Port of Koper will record steady annual growth of just over 3%.
Headline Industry Data
* 2014 air freight tonnage is forecast to increase 6.50% y-o-y to 8,690 tonnes
* 2014 rail freight tonnage is forecast to rise 0.80% to 15.48mn tonnes
* 2014 road freight tonnage throughput is predicted to grow 1.51% to 57.34mn tonnes
* 2014 Port of Koper tonnage growth is expected to increase by 3.20% to 19.01mn tonnes
* Total trade in 2014 is forecast to increase by 2.15% in real terms
Key Industry Trends
Slovenia Strengthens Links With Germany - The Port of Koper is now connected to Munich, Germany, due to a new railway freight transport service initiated by Rail Cargo Group in September 2013. Five return trains are to be operated a week between the Slovenian port and Munich Riem UBF.
Privatisation of Adria Airways Still Not Completed - Adria Airways does not need a strategic partner, according to the acting and most probable new chairman of Adria Airways, Mark Anzur, speaking to The Slovenia Times in May 2013. Meanwhile, it was speculated in the summer of 2013 that one of the world's largest airlines China Southern was pondering a bid for the Slovenian airline.
Koper Still Dominates Northern Adriatic - The port of Koper's latest investment announcement is unsurprising as the port has long been competing with regional rivals for the much-coveted role of becoming the Adriatic's maritime gateway. The only threat for Koper to worry about, albeit small, would be the future development and progress of Croatia's port of Rijeka under the operations of International Container Terminal Services Inc (ICTSI); but despite this the Croatian port still lags behind Koper by a considerable margin in terms of throughput handling.
Key Risks To Outlook
Potential for economic recovery in the European Union remains one of the rare bright spot for Slovenia's economy and, by extension, the country's freight industry. Upside to our forecast could come from strong performance among the country's trading partners. Early signs of economic acceleration in Germany hint at better export performance for Slovenia and therefore a milder recession.
Despite Prime Minister Alenka Bratusek's early success in gaining consensus on key reforms from her four-party coalition, we expect the Slovenian government to face challenges by the end of 2013 and throughout 2014 due to its fragmented nature. Dissent could occur with respect to the large-scale privatisation plan, but also on planned reform of the pension system. Tests for the government will come before the end of 2013 as further fiscal reforms are expected, and throughout 2014 as politicians prepare for the upcoming local elections.
The repeated corruption allegations that led to former Prime Minister Janez Jansa to be removed from power and sentenced to two years in jail have largely undermined the credibility of Slovenia's political elite. This, along with the country's worsening economic outlook, low capitalised banking sector and political fragmentation implies little hope for timely political solutions for the instabilities looming.
Further support to Slovenia's trade balance will likely come from two separate factors: the country's improving competitiveness and the potential for economic acceleration in Germany. Slovenia's labour market has been showing significant flexibility over the last few months, adapting rapidly to evolving economic conditions. With the country's Labour Cost Index falling 5.9% y-o-y in Q2 2013, domestic industries are experiencing a boost in competitiveness against other European markets. In comparison, average labour cost in the European Union increase between 1.3% and 1.7% y-o-y every quarter between Q1 2012 and Q1 2013.
If this trend continues over the coming quarters, this adjustment will result in stronger export volumes and weaker imports as domestic demand decreases. Export unit value also fell by 1.8% in H1 2013 compared to H1 2012, led mostly by a drop in the value of mineral fuels and lubricants, but also machineries and equipments, one of Slovenia's most important exports.
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