May 30 (Bloomberg) -- Slovenia’s economy extended its second recession in three years in the first quarter as export and investment growth slowed, a survey of economists showed.
Gross domestic product shrank 1.5 percent from a year earlier, compared with a 2.8 percent annual drop in fourth quarter, according to the median estimate of six economists in a Bloomberg survey. The statistics office will publish its GDP report at 10:30 a.m. in Ljubljana tomorrow.
“It looks like exports have slowed while investments may have contracted at a slower pace than in the previous quarter,” William Jackson, an emerging-markets economist at Capital Economics Ltd. in London said before the report. Jackson forecast the economy contracted 0.5 from the previous three-month period.
Slovenia fell into a recession after austerity measures and Europe’s debt crisis damped demand for its exported goods, the main growth driver of the euro-region nation. The shrinking economy complicates the government’s efforts to trim public spending by about 800 million euros ($997 million) by year’s end.
The government of Prime Minister Janez Jansa, which came to power in February after early elections, is pushing to implement spending cuts and tax increases to gain investor confidence and lower the country’s borrowing costs as the debt crisis that started more than two years ago in Greece continues to roil markets.
“First, we need to consolidate public finances,” Finance Minister Janez Sustersic said by phone today. “ We don’t have options to boost the economy other than to spur domestic, and especially, foreign investments. I expect we will see a stabilization this year and the economy will yield better results next year.”
Slovenia’s debt more than doubled since adopting the euro in 2007 to 47.4 percent of GDP last year. The European Commission sees the debt level advancing to about 55 percent this year and 58.1 percent in 2013, it said in a May 11 report.
GDP will shrink 2 percent in 2012, according to an estimate by the Organization for Economic Cooperation and Development. That compares with a 1.4 percent contraction forecast by the European Commission and a 0.9 percent drop estimated by the government’s economic institute.
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