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2021/06/11 / Erste Group Research

2021 growth outlook improving on better than expected 1Q developments


Despite pressures coming from deteriorated epidemiologic picture at the beginning of the year, GDP surprised on the upside with 1.6% y/y increase in 1Q. Domestic demand showed favorable developments as investments activity further accelerated and private consumption rebounded. Both exports and imports showed mild growth amid solid performance on the goods side, while services revealed another double-digit slump. Negative contribution to the headline figure, besides already mentioned services, came from lower public consumption and inventories, with latter one shaving off 0.1pp from GDP growth in 1Q21.

With headline figure showing stronger resilience by starting recovery already in 1Q21, we see GDP expanding by 5% in 2021. CPI trajectory accelerated amid increase in energy prices, pushing the headline figure towards 2% mark. Due to measures introduced to mitigate adverse impact of the COVID-19 pandemic, 2020 budget gap expectedly amounted to 8.4% of GDP, while public debt increased to 80.8% of GDP. 2021 deficit is projected to remain high, while debt levels should stabilize on the back of rebound in the nominal GDP. 10Y yield stabilized in recent weeks around 0.15% level, while keeping unchanged spread vs. Germany (around 35bp).


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General information

AuthorErste Group Research
Date2021/06/11
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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