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2020/03/18 / Erste Group Research

Growth prospects hampered amid gloomier global outlook

GDP growth decelerated to 1.7% y/y in 4Q19 (vs. 2.4% in 3Q19), mainly due to weaker domestic demand performance. On the annual level, GDP posted average growth of 2.4%. Going into 2020 we see domestic demand support stabilizing, in near-term remaining at risks from COVID-19 outbreak. On the other hand, rising uncertainties regarding external demand performance would hamper exports prospects, with negative impact of the COVID-19 virus additionally weighing on the growth outlook, especially in 1H20. Thus, we revised our GDP forecast to 0.8% for 2020 with clear downside risks.

Inflation is likely to diminish as demand side pressure should take some hit in near term, while cost-side should also have supportive role. Fiscal side developments would be shaped by economic slowdown and fiscal response to COVID-19, in that sense we would expect that budget would turn red in 2020. Public debt should remain around 65% of GDP. On the political scene, beginning of the year brought government reshuffle as Mr. Jansa, leader SDS, was appointed as new PM following Mr. Sarec resignation.

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General information

AuthorErste Group Research
Product nameCEE Country Macro Outlook
Topic in focusFX, Macro/ Fixed income
Economy in focusSlovenia
Currency in focusEuro
Sector in focus-


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