January 16 (SeeNews) - Italian financial group UniCredit revised down its estimate for Slovenia's gross domestic product (GDP) growth in 2023 to 0.5% from 1.0% due to negative carryover from 2022, it said.
"The impact of high commodity prices, a squeeze on real income, and lower growth among Slovenia's main trading partners will likely lead to further GDP contraction in the first quarter of 2023, after GDP already fell in the third quarter of 2022 and most likely also in the fourth quarter of 2022," UniCredit said in a quarterly macroeconomic report on Central and Eastern Europe last week.
Consumption growth will likely slow markedly due to a reduction in purchasing power and a deterioration in consumer confidence, as real wages contracted sharply, by more than 6% in 2022, and will likely continue to contract in 2023 due to planned hikes in public sector wages and of the minimum wage, UniCredit said.
Inflation will likely remain high, close to 10%, in the first quarter of 2023, but will slow thereafter, as government measures aimed at mitigating the impact of high global energy prices should contain inflationary pressure, particularly in the first half of the year.
The government deficit will likely increase to 5% of GDP from 3%, mainly due to the 1.5 billion euro government measures to mitigate high energy prices, while Slovenia’s debt-to-GDP ratio will remain high and edge down from 70% in 2022 to 69% by 2024.
UniCredit expects Slovenia's economic growth to pick up to 2.2% in 2024, driven by a recovery in consumption, private investment, and a larger contribution from net exports.