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Slovenia Business Week no. 24/2005: Economic Growth Slows to 2.6%

According to the National Statistics Office, annual GDP growth in the first quarter stood at 2.6%, well below the 4.6% growth registered in 2004

Slovenia's economy has cooled off somewhat after expanding at a rapid pace last year. According to the National Statistics Office, annual GDP growth in the first quarter stood at 2.6%, well below the 4.6% growth registered in 2004.

Data from the office shows that quarterly growth stood at 0.9%, which is well under the 1.6% rate seen in the first quarter of 2004.

The office said the slowing of the economic expansion had in fact started at the end of last year and spilled over into the first quarter of this year.

Despite the ease-up in the rate of growth, the Statistic Office is confident that growth would meet forecasts of 3.8% by the end of the year.

The slower growth in the first quarter does not necessarily mean a continuation of the trend for the rest of the year, said Karmen Hren of the Statistics Office.

"This time last year we were facing EU membership and certain things were slightly inflated," Hren told the press in Ljubljana on Thursday, 9 June.

Domestic spending saw slower growth in all fields except state spending, the office said. The biggest fall in growth was registered in gross fixed capital formations, which fell 0.5% in real terms over last year, it added.

The reason behind the fall in fixed capital formations is reduced investment in transport equipment as compared to last year and a drop in the construction of non-residential buildings, Hren said.

According to the office, a slowdown in the growth of trade compared to last year is also playing its part in dampening the country's economic expansion. However, exports continue to grow faster than imports, which is important for future growth, Hren said.

Data shows that exports grew by 9% over the same period last year, while imports were up 6.6%.

Source: Slovene Press Agency STA

Author: STA