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2020/04/03 / Erste Group Research

Economic activity stongly impaired in 2020 amid coronavirus outbreak


Following average growth of 2.4% in 2019, growth prospect got gloomier going into 2020 as rapid COVID-19 outbreak took heavy toll on the economy. Domestic side of the economy takes a hit due to lock-down measures, followed by second-round effects. Moreover, deteriorated EU growth outlook (which was also present before coronavirus outbreak, albeit at much less pronounced pace) would hit external demand performance hard. Thus, in the light of current situation, we see GDP contracting around 6.5% mark, with risks remaining pronounced on the downside.

Inflation is likely to diminish as demand side pressure should take some hit in coming months, while cost-side should reflect lower oil prices. Fiscal side developments would be shaped by economic slowdown and fiscal response to COVID-19, in that sense we would expect that budget would go significantly in red in 2020. Public debt is seen reverting back to the upside trajectory by moving above 75% of GDP mark. 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
Date2020/04/03
Languageen
Product nameCEE Country Macro Outlook
Topic in focusFX, Macro/ Fixed income
Economy in focusSlovenia
Currency in focusEuro
Sector in focus-
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