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2021/09/10 / Erste Group Research

Domestic demand in the focus of the recovery

After increasing by 1.7% y/y in 1Q21, the GDP recovery gained additional momentum, as the headline figure posted strong growth of 16.3% y/y in 2Q21, supported by stronger than expected developments on the domestic demand side, while net exports had a mildly negative contribution, on account of the stronger import vs. export increase. The 2H21 outlook remains favorable, with domestic demand expected to remain the main growth driver. The better than expected 1H21 performance triggered upside revision, with the FY21 growth figure now expected at the 7.2% mark.

The CPI trajectory accelerated, amid an increase in energy prices, keeping the headline figure around the 2% mark in both 2Q and 3Q. The budget deficit is projected to remain high this year, as the recovery on the revenue side should be offset by still elevated pressures on expenditures. Public debt levels should stabilize below the 80% of GDP mark, on the back of a rebound in nominal GDP. The 10Y yield currently moves around the 0% mark, while keeping an unchanged spread vs. Germany.

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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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