.^'IMAD O fü Q) £ u E o >< O Ü) o u 0) m CD fN < Slovenian Economic Mirror ISSN 1318-3826 No. 4 / Vol. XIX / 2013 Publisher: IMAD, Ljubljana, Gregorčičeva 27 Responsible Person: Boštjan Vasle, MSc, Director Editor in Chief: Tina Nenadič, MSc Authors of Current Economic Trends (listed alphabetically): Jure Brložnik, Gonzalo Caprirolo, MSc, Janez Dodič, Marjan Hafner, Matevž Hribernik, Slavica Jurančič, Mojca Koprivnikar Šušteršič, Janez Kušar, Urška Lušina, MSc, Jože Markič, PhD, Helena Mervic, Tina Nenadič, MSc, Mitja Perko, MSc, Jure Povšnar, Ana T. Selan, MSc, Branka Tavčar, Dragica Šuc, MSc Authors of Selected Topics: Mojca Koprivnikar Šušteršič (Tourist arrivals and overnight stays in 2012) Editorial Board: Lidija Apohal Vučkovič, Marijana Bednaš, MSc, Alenka Kajzer, PhD, Rotija Kmet Zupančič, MSc, Janez Kušar, Boštjan Vasle, MSc Translator: Marija Kavčič Data Preparation and Graphs: Bibijana Cirman Naglič, Marjeta Žigman Concept and Design: Katja Korinšek, Pristop DTP: Bibijana Cirman Naglič Print: SORS Circulation: 90 copies © The contents of this publication may be reproduced in whole or in part provided that the source is acknowledged. Contents In the spotlight................................................................................................................................................................3 Current economic trends..............................................................................................................................................5 International environment...............................................................................................................................................7 Economic developments in Slovenia.............................................................................................................................9 Labour market..................................................................................................................................................................15 Prices..................................................................................................................................................................................17 Balance of payments.......................................................................................................................................................20 Financial markets.............................................................................................................................................................21 Public finance....................................................................................................................................................................23 Boxes Box 1: General government balance and government gross debt in EU Member States....................................8 Box 2: Market shares in 2012 ........................................................................................................................................10 Box 3: (In)solvency..........................................................................................................................................................12 Box 4: The volume of road and rail freight transport................................................................................................14 Selected topics Tourist arrivals and overnight stays in 2012...............................................................................................................27 Statistical appendix.....................................................................................................................................................29 The Economic Mirror is prepared based on statistical data available by 8 May 2013. On January 2008, the new classification of activities of business entities NACE Rev.2, which replaced NACE Rev. 1.1, came into force in all EU Member States. In the Republic of Slovenia, the national version of the standard classification, SKD 2008, which includes the entire European classification of activities but also adds some national subclasses, came into force on the mentioned date. In the Slovenian Economic Mirror, all analyses are based on the SKD 2008, except when the previous SKD 2002 classification is explicitly referred to. More general information about the introduction of the new classification is available on the SORS website http://www.stat.si/eng/ skd nace 2008.asp. All seasonally adjusted data in the Economic Mirror are calculations by IMAD. In the spotlight International institutions revised downwards again the estimates for euro area economic growth in 2013 and 2014 in their spring forecasts. The IMF and the European Commission expect the recession in the euro area to continue (-0.3% and -0.4% respectively), mainly on account of modest domestic demand as a consequence of the tightened situation on the labour market, continued fiscal consolidation and the deleveraging of banks, enterprises and households in most Member States. The anticipated recovery in the second half of this year will be primarily a result of foreign demand, while next year's growth will also stem from the rebound in demand on the domestic market. The risks to the forecast are otherwise smaller, as tensions on the financial markets eased at the beginning of the year, but they remain related to the rising unemployment and progress in dealing with the sovereign debt crisis in the most exposed Member States. Short-term indicators of economic activity, which are related to the international environment, improved in Slovenia at the beginning of the year. Manufacturing output and real merchandise exports were up year-on-year in the first two months due to the strong growth in February, while activity in sectors that are more oriented to the domestic market largely declined and remained lower year-on-year. Turnover in trade sectors mainly declined again in February, as did construction activity, which recorded the largest year-on-year decline again. Turnover in most service activities stayed unchanged in February, while in the first two months as a whole it was around the same level as in the same period of last year. At the beginning of this year the situation on the labour market deteriorated further; wages were down again year-on-year in February. Formal employment continued to decline at the beginning of the year, falling relatively the most in the construction sector again. The unemployment rate thus increased further in February, to 13%, seasonally adjusted. At the end of the first quarter the number of registered unemployed persons reached 122,630, and was up 8.5% (or 9,698 persons) year-on-year, largely on account of more newly registered unemployed (5,806), but also due to a smaller outflow from the unemployment register (658 persons). The average gross wage declined in February, being down year-on-year in the private sector and even more in the public sector, in the latter owing to lower general government wages. Consumer prices rose by 0.7% in April, and were 1.5% higher year-on-year. Their monthly growth was influenced primarily by seasonally higher prices of clothing and footwear (0.5 p.p.) and an increase in public utility prices (0.1 p.p.), while liquid fuel prices fell (-0.1 p.p.). Year-on-year inflation dropped chiefly due to a decline in prices of semi-durable goods. Cost competitiveness continued to improve last year, but during the crisis losses remain significant, while the decline in the global market share deepened further. In the final quarter of last year and in the entire year cost competitiveness improved more than, on average, in the EU and euro area countries due to a more pronounced decline in relative unit labour costs. This was mainly attributable to lower labour costs. In Slovenia labour costs fell the most in the public sector, as a result of fiscal consolidation, while they were also somewhat lower in the private sector. Despite the relatively more favourable movements in the last two years, Slovenia remains in the group of EU countries with the greatest losses in cost competitiveness during the crisis due to a more pronounced deterioration in 2008 and 2009. The decline in Slovenia's global market share, seen since the beginning of the crisis, deepened last year mainly due to lower shares on the French and Croatian markets. Broken down by products, a further decline in the market share of road vehicles played the greatest role on the EU market, although the shares of some less technology-intensive products also declined. The situation in the Slovenian banking system continues to deteriorate; the share of bad claims increased again. Households decreased their loans by more than EUR 107 m in the first three months. The volume of deposits rose only by around EUR 35 m in the first quarter owing to the strong March decline in short-term deposits, in particular. In the same period of last year government deposits increased only by around EUR 55 m. Corporate and NFI deleveraging slowed slightly in March. In the first three months the volume of their loans fell by around EUR 335 m. Enterprises also repaid some of their foreign debts in February. In the first two months the net flow of corporate and NFI foreign loans was positive primarily owing to short-term net borrowing. In February the banks increased slightly again their net repayments of liabilities to foreign banks. The volume of bad claims rose in February (to 14.6%), so that impairments and provisioning reached EUR 104.2 m in the first quarter. In the first two months the public finance deficit totalled EUR 482 m and was down 7.4% year-on-year. The decline was a consequence of 2.2% higher revenue and 4.4% lower expenditure. The y-o-y increase in revenue was attributable to higher non-tax revenue and inflows of EU funds, while most revenues from taxes (except excise duties) declined. Revenue from corporate income tax was down the most, by a third. The majority of public finance expenditures were lower than in the same period of last year, with the exception of payments to the EU budget. The main contribution to the decline came from lower expenditure on wages, salaries and other personnel expenditures, and lower transfers to individuals and households. ■o £ Q) E o £ 0 u 01 £ 01 3 U International environment The IMF and the European Commission revised downwards again the estimates for euro area economic growth in 2013 and 2014 in their spring forecasts. The IMF predicts 3.3% economic growth for this year, which is similar to last year (3.2%), yet lower than the January forecast. The largest contribution to growth will again come from emerging Asian economies (for example China, India), where growth will accelerate this year relative to 2012, while the recovery in advanced economies remains uncertain. Both institutions expect that the recession in the euro area will continue this year (the Commission -0.4%, the IMF -0.3%) mainly on account of weak domestic demand, which will be negatively impacted by the adverse situation on the labour market, the continuation of fiscal consolidation, and bank, corporate and household deleveraging in the majority of Member States. A gradual recovery is expected in the second half of the year, mainly under the influence of foreign demand. Both institutions anticipate renewed euro area growth in 2014, when domestic demand will start recovering amid a gradual improvement in the labour market situation. As tensions on the financial markets eased at the beginning of this year, the risks to the forecast are smaller than in the autumn, but they are still associated with the impact of rising unemployment on domestic demand and progress in dealing with the sovereign debt crisis in the most exposed euro area countries. The continuation of structural reforms and the strengthening of the European monetary union are of crucial importance, according to both institutions. Table 1: Comparison of GDP growth forecasts by international institutions for 2013 and 2014 2013 2014 OECD Nov 12 IMF Apr 13 CONS Apr 13 EK May 13 OECD Nov 12 IMF Apr 13 CONS Apr 13 EK May 13 EMU -0.1 -0.3 -0.4 -0.4 1.2 1.1 0.9 1.2 EU N/A 0.0 -0.1 -0.1 N/A 1.3 1.2 1.4 DE 0.7 0.6 0.7 0.4 1.9 1.5 1.7 1.8 IT -1.6 -1.5 -1.4 -1.3 -0.1 0.5 0.5 0.7 AT 0.8 0.8 0.6 0.6 1.8 1.6 1.5 1.8 FR 0.3 -0.1 -0.1 -0.1 1.2 0.9 0.7 1.1 UK 0.5 0.7 0.7 0.6 1.5 1.5 1.6 1.7 US 2.0 1.9 2.1 1.9 2.8 3.0 2.7 2.6 Source: Economic Outlook (November 2012), IMF World Economic Outlook (April 2013), Consesus Forecasts (April 2013), EC Forecast Spring 2013 (May 2013). Note: N/A - not available. In the first quarter the credit standards for enterprises and households tightened less than in previous quarters. The tightening was again mainly a result of negative expectations regarding the economic recovery. According to the ECB Euro Area Bank Lending Survey, in the first quarter the share of banks that reported a tightening of credit standards was 7% larger (in the final quarter Figure 1: Structure of economic growth in the euro area Households ^HGovernment ^HGross fixed capital formation ^MChang.in inventories&valuables INet exports -GDP (right axis) 4 forecast I 0 cS -1 :!3 -3 -4 of last year, 13%) than the share of those that reported an easing. Assessments of the deterioration in credit standards are fairly similar for small and large enterprises and for all maturities of loans, and the tightening is mainly reflected in the widening of margins on risky loans. Debt restructuring remains the main reason why enterprises take out a loan, while demand for investment loans continues to decline. The credit standards for households are also deteriorating, particularly for housing loans. Given the continuing adverse conditions, demand for corporate and household loans declines, and banks expect no major changes in this trend in the second quarter. Figure 2: The ECB Euro Area Bank Lending Survey I Credit standards for loans to enterprises over the past 3 months (left axis) - Credit standards for loans to enterprises over the next 3 months (left axis) - Demand for loans to enterprises over the past 3 months (rigth axis) ■ Demand for loans to enterprises over the next 3 months (right axis) a a Source: ECB. 3 2 Source: EC, Box 1: General government balance and government gross debt in EU Member States The decline in the general government deficits in EU Member States slowed in 2012. Most countries continued to consolidate their public finances, though at a much slower pace because of lower economic activity. In the EU the general government deficit declined by 0.4 p.p. to 4.0%, in the euro area by 0.5 p.p. to 3.7%. The deficit was reduced in approximately half of EU countries, most notably in Italy, the Netherlands and Slovenia. In 12 countries the deficit widened, also in those that have already asked, or received, assistance from the EFSF/ ESM.1 More than half of the countries have otherwise failed to reach the deficit reduction goals2 set in the first half of last year. The government gross deficit increased strongly again in 2012, totalling 85.3% of GDP in the EU and 90.6% of GDP in the euro area, around 3 p.p. more than a year earlier, and over 20 p.p. more than in 2008. Currently, 20 EU Member States are in the excessive deficit procedure. The excessive deficit procedure sets that countries should bring their deficits below 3% of GDP by 2013.3 The Commission is expected to halt the procedure against four of eight Member States that managed to reduce their deficits accordingly last year. According to the forecasts in the Stability Programmes, EU Member States will continue to consolidate public finances this year. The Commission expects slightly slower progress in structural deficit reduction than last year. With the contraction in GDP, the government debt to GDP ratio will increase slightly again. Table 2: General government balance and government gross debt in EU Member States, in % of GDP 1 With the exception of Ireland, where the deficit otherwise declined by 5.8 p.p., but still accounts for 7.6% of GDP. 2 In line with stability programmes for euro area Member States, or convergence programmes for non-euro area Member States. 3 With the exception of Greece, Ireland and the United Kingdom, which have longer deadlines. Government bond yields declined in most euro area countries in April. With the easing of the situation in Cyprus and the political uncertainty in Italy, the yields in the majority of the most exposed euro area countries declined. The yields of the countries with the highest credit ratings (AAA) remained very low and the yield spreads to the German 10-year government bonds of the most exposed countries mainly declined. The interbank interest rates in the euro area remained nearly unchanged in April, while the ECB lowered the key interest rate to a record low at the beginning of May. The 3-month EURIBOR rate stood at 0.21% in April, which is slightly higher than the lowest rates to date in December 2012. General government deficit/ surplus Consolidated general government gross debt 2012 2012 2011 Stability1 Programme 2012 Actual 2011 Stability1 Programme 2012 Actual EU -4.4 -4.0 82.5 85.3 EMU -4.2 -3.7 87.3 90.6 AT -2.5 -3.0 -2.5 72.5 74.7 73.4 BE -3.7 -2.8 -3.9 97.8 99.4 99.6 BG -2.0 -1.6 -0.8 16.3 19.8 18.5 CY -6.3 -2.6 -6.3 71.1 72.1 85.8 CZ -3.3 -3.0 -4.4 40.8 44.0 45.8 DE -0.8 -1.0 0.2 80.4 82.0 81.9 DK -1.8 -4.0 -4.0 46.4 40.5 45.8 EE 1.2 -2.6 -0.3 6.2 8.8 10.1 ES -9.4 -5.3 -10.6 69.3 79.8 84.2 FI -0.8 -1.1 -1.9 49.0 50.7 53.0 FR -5.3 -4.4 -4.8 85.8 89.0 90.2 GR2 -9.5 -10.0 170.3 156.9 HU 4.3 -2.5 -1.9 81.4 78.4 79.2 IE -13.4 -8.3 -7.6 106.4 117.5 117.6 IT -3.8 -1.7 -3.0 120.8 123.4 127.0 LT -5.5 -3.0 -3.2 38.5 40.2 40.7 LU -0.2 -1.5 -0.8 18.3 20.9 20.8 LV -3.6 -2.1 -1.2 41.9 44.5 40.7 MT -2.8 -2.2 -3.3 70.3 70.3 72.1 NL -4.5 -4.2 -4.1 65.5 70.2 71.2 PL -5.0 -2.9 -3.9 56.2 53.7 55.6 PT -4.4 -4.5 -6.4 108.3 113.1 123.6 RO -5.6 -2.8 -2.9 34.7 34.2 37.8 SE 0.2 -0.1 -0.5 38.4 37.7 38.2 SI -6.4 -3.5 -4.0 46.9 51.9 54.1 SK -5.1 -4.6 -4.3 43.3 50.2 52.1 UK -7.8 -5.9 -6.3 85.5 89.0 90.0 Source: Eurostat, Stability Programmes/Convergence Programmes, April 2012. Note: 1Stability programmes for euro area Member States or convergence programmes for non-euro area Member States; 2the stability programme for Greece was not prepared in 2012. It was down 54 basis points year-on-year. The 3-months USD and CHF LIBOR rates also remained unchanged, at 0.28% and 0.02% respectively. At the beginning of May the ECB lowered the key interest rate for main refinancing operations by 0.25 p.p. to 0.5%. In April the euro appreciated slightly against the US dollar, but was still lower than at the beginning of the year. The average exchange rate of the euro increased by 0.5% against the US dollar (to USD 1.303 per euro), while it was 1.0 % lower year-on-year. The euro also gained value against the Japanese yen (by 3.7% to JPY 127.54 per euro), while it depreciated against the British pound sterling and the Swiss franc (by 1.1% to GBP 0.851 per euro; by 0.5% to CHF 1.220 per euro). Figure 3: Yields on ten-year government bonds -Slovenia -Italy -Portugal -----Ireland 16 Spain Germany 10 Source: Bloomberg. Oil prices declined strongly for the second consecutive month, reaching the lowest level in ten months. Non-energy commodity prices were also down. Oil prices in dollars fell by 5.8% in April, to USD 102.28 a barrel, and were 14.7% lower year-on-year. Oil prices in euros dropped by 5.7% to EUR 78.4, and were 13.2% lower year-on-year. According to IMF figures, non-energy commodity prices declined by 3.0% and reached the lowest levels in the last four months. The declines were mainly attributable to lower metal prices and slightly lower food prices. Provisional data indicate a further fall in non-energy commodities in April. Figure 4: Prices of Brent crude and the USD/EUR exchange rate -Price in EUR (left axis) -Price in USD (left axis) -Exchange rate of USD to EUR (right axis) 1.6 1.2 , 20 0.6 Economic developments in Slovenia Short-term indicators of economic activity, which are related to the international environment, improved at the beginning of the year. Manufacturing output and real merchandise exports were up year-on-year in the first two months due to strong February's growth. Activity in industries that are predominantly oriented to the domestic market continued to decline. Construction activity and turnover in trade sectors thus remained lower year-on-year, while turnover in service activities stayed at a similar level as in the same period of last year. Figure 5: Short-term indicators of economic activity Slovenia in - Merchandise exports - Industrial production in manufacturing Construction put in place - Turnover in retail trade_ Source: SORS; calculations by IMAD. Table 3: Selected monthly indicators of economic activity in Slovenia in % 2012 II 13/ I 13 II 13/ II 12 I-II 13/ I-II 12 Exports1 1.7 1.0 3.1 3.2 -goods 0.9 3.4 2.4 3.0 -services 5.3 -9.3 6.8 3.9 Imports1 -2.0 -8.2 -4.4 -0.1 -goods -2.3 -9.9 -5.4 0.0 -services -0.1 6.6 3.4 -0.8 Industrial production -0.9 6.12 3.33 0.73 -manufacturing -2.1 5.92 3.33 0.33 Construction -value of construction put in place -16.8 0.62 -11.33 -16.53 Real turnover in retail trade -2.3 -1.92 -3.93 -4.73 Nominal turnover in market services (without trade) -2.9 -0.22 0.03 -0.13 Sources: BS, Eurostat, SORS; calculations by IMAD. Notes: 1balance of payments statistics, 2seasonally adjusted, 3working-day adjusted data. 14 E 12 8 6 4 2 0 1.8 1.4 1.0 Box 2: Market shares in 2012 The decline in Slovenia's global market share deepened in 2012 due to a fall in the market shares in EU countries and outside the EU. This means a further loss in Slovenia's export competitiveness after the decline in the global market share eased in 2011. Following the increase in 2011, Slovenia's market share in the EU dropped again last year (-3.7%) amid modest import demand, particularly for manufactured goods. This was mainly related to a fall in the market shares in France (by nearly a fifth) and on some relatively less important EU markets.1 The market shares in Germany, Italy and Austria, which are Slovenia's most important EU markets in addition to France, increased. Among the main trading partners outside the EU, last year Slovenia's market share fell in Croatia and in the US. In Serbia, Bosnia and Herzegovina and Macedonia it increased, as it did in Russia. Slovenia was in the group of EU Member States with above-average declines in global market shares last year (-9.5%).2 Figure 6: Change in Slovenia's shares on the global market and in the EU The decline in Slovenia's market share in the EU in 2012 was mainly attributable to road vehicles. The drop in the market share of road vehicles contributed to a fall in the market share of machinery and transport equipment, although the market shares of electrical machinery and appliances, general industrial machinery, power-generating machinery and machinery specialised for particular industries rose. The fall in the share of road vehicles is also attributable to the lower market share in France, which dropped for the third consecutive year after the incentives for car purchases began to be phased-out in 2010. The market share of miscellaneous manufactured articles also declined, chiefly on account of a lower share of furniture. The market share of manufactures classified by material remained at the 2011 level as a result of larger shares of metals, textile yarn and fabrics, while the shares of metal, paper, cardboard, and rubber manufactures declined. Among manufactured goods, only the market share of chemical products increased last year, as a result of growth in the shares of medical and pharmaceutical products, materials for dyeing and tanning and essential oils.3 The market share of primary products rose somewhat last year, under a strong influence of oil and oil products. 1 Poland, Hungary, Spain, Greece, Belgium, the Netherlands, Ireland, Portugal, Sweden, Finland, Cyprus, Lithuania, Bulgaria and Romania and the UK. 2 The EU share on the global merchandise market declined by 6.3% in 2012. Lithuania, Latvia and Greece were the only EU Member States to increase their shares on the global merchandise market, while only four other Member States recorded larger declines than Slovenia (Finland, Sweden, Romania and Luxembourg). 3 In addition to some less important groups of chemical products: organic and inorganic chemicals, essential oils, fertilisers, plastics, etc., which account for less than 1% of merchandise exports. 4 Accounting for 2% (or more) of total merchandise exports in the EU in 2011. Figure 7: Change in market shares in main trading partners in the 2012 ■ Global market ♦ EU ♦ n cicBcicicicicBcicicDCD^r CNrNrNrNrNrNrNrNrNrNrNCS Source: UN until 2011; calculations by IMAD. * Note according to the first, provisional data. Figure 8: Change in market shares in the EU by main SITC sections,4 in 2012 I Exports Slovenia Umports EU ♦ Market share 1= ^ ^^ ^^ tč CJ ^^ ^ ^^ ^^ Source: SOI^S, Eurostat, WIIW, US Census Bureau; calculations by IMAD. J ii ^^^ ^ ^ ^ Source: Eurostat; calculations by IMAD. Note: * Exports 73.7%; market share 52.9%. -7 Real merchandise exports strengthened in February after the stagnation in previous months, in contrast to real merchandise imports, which fell notably in February.1 After remaining basically unchanged in the previous four months, real merchandise exports rose substantially in February, according to our estimate (3.4%, seasonally adjusted). Compared with the same month last year, they were up 1.6%; exports to non-EU countries continued to rise strongly, while exports to the EU remained lower year-on-year. After the strengthening in the previous two months as a consequence of one-off transactions, real merchandise imports declined significantly in February (-6.4%, seasonally adjusted) according to our estimate, being also much lower than in February 2012 (-4.7%). The Figure 9: Merchandise trade - real -Exports -Imports ä 105 |2 100 95 90 85 75 ■"T......?......:.......?...... ......r......?......:.......?...... t-r......r......!.......r...... ......f......prf^-f...... ......f..... ......^......1......?......^........ ■I4......1......j.......[...... ■■■■Vj......j.......[■■■■" Vv"' A ......t......— ......{■...... ......{■..... ......1..... v-^ V ............■*.......i.....V....J ......4......4......4......4..... 1 Source: SORS; calculations by IMAD. 10: Trade in services - nominal -Exports of services -Imports of services JO ^ JO ^ JO Source: SORS; calculations by IMAD. 1 The estimate of real merchandise exports has been made on the basis of nominal exports according to the external trade statistics and industrial producer prices on the foreign market, while real merchandise imports have been estimated based on nominal imports according to the external trade statistics and the index of import prices. falling of merchandise imports since mid-2011 was, amid weak growth in exports, mainly attributable to a decline in domestic consumption. Nominal exports of services continued to decline in February, while imports increased after falling in previous months.2 Exports of services were down slightly in February (-0.8%, seasonally adjusted), owing to a fall of exports in the group of other services,3 while exports of the other three groups of services rose. Imports of services rose substantially in February (7.2%, seasonally adjusted), but they have been basically unchanged for three years, with monthly fluctuations. After the decline in the second half of last year, manufacturing output increased at the beginning of 2013. February's growth was again underpinned by industries of higher technology intensity and by medium-low-technology industries. The decline in low-technology production continued, but it has eased in recent months (seasonally adjusted). Sales revenues on the domestic market, where low-technology industries generate a larger share of revenues than the other two groups, did not drop further at the beginning of the year. After falling in the second half of last year, revenues from sales on the foreign market increased again. The increase was mainly attributable to revenues outside the euro area, which were up again year-on-year in the first two months (14.1%), while revenues in the euro area remained down compared with the same period of last year (-4.5%). Figure 11: Production volume in manufacturing according to technology intensity and sales revenues according to geographical orientation - Low-technology industries - Medium-low-technology industries Medium-high and high-technology industries Sales revenues domestic market ■ Sales revenues foreign market oooocgc^c^c^.::,--^.^;,^^ Ji Ji Ji i; Source: SORS; calculations by IMAD. 2 According to the balance of payments statistics. 3 When adjusting data for seasonal effects, we placed communication, construction, financial, computer and information activities, personal service activities, arts, entertainment and recreation activities, government services, insurances and licences, patents and copyrights into the group of other services. Together, they account for just over a tenth of services exports and almost a third of services imports. H 80 70 Box 3: (In)solvency In the first quarter of this year the number of legal entities with outstanding liabilities1 was more than a third higher year-on-year. Relative to the same period of last year, it increased most notably in other miscellaneous business activities, professional, scientific and technical activities and manufacturing (by more than half). Legal entities in the construction sector and in the sale, maintenance and repair of motor vehicles had the most outstanding matured liabilities in March 2013 (a fifth of all liabilities each); in both sectors more than three quarters of these entities were microenterprises.2 The number of sole proprietors and other registered natural persons with outstanding matured liabilities was also more than a third higher year-on-year in the first three months, as was the average monthly amount of their liabilities. In April the tax administration published a list of delinquent taxpayers3 which owe the largest amount of tax. The purpose of the list was to improve financial discipline and the tax culture and promote voluntary, correct and timely reporting and payment of tax liabilities. The list includes all debtors with outstanding matured liabilities4 over EUR 5,000, i.e. almost 16,000 legal and natural persons whose total outstanding liabilities exceed EUR 900 m. In the first quarter one half more compulsory settlements and one seventh fewer bankruptcy proceedings were filed against legal entities compared with the same period last year, and almost one half fewer personal bankruptcy procedures against sole proprietors. A total of 133 bankruptcy proceedings (the most in the sale, maintenance and repair of motor vehicles, construction, professional, scientific and technical activities and manufacturing) and 15 compulsory settlements were initiated against legal entities, and 14 personal bankruptcy proceedings and 1 compulsory settlement against sole proprietors. Figure 12: Legal entities with outstanding matured liabilities for more than five consecutive days in a month and average amount of outstanding liabilities ^^B Average no. of legal entities with outstanding matured liabilities (left axis) -Average daily amount of outstanding matured liabilities, EUR m (right axis) 8,000 7,000 6,000 5,000 ,000 3,000 2,000 1,000 0 800 700 600 500 E cc 400 =3 J! 300 200 100 0 Figure 13: Filing of bankruptcy proceedings ^^■Bankruptcies against legal entities (left axis) ■ Personal bankruptcies against sole proprietors (right axis) a a Source: AJPES 60 50 40 20 10 a a a Source: AJPES, Slovenian Business Regis 1 I.e. outstanding matured liabilities for more than five consecutive days in a month. The AJPES records include only outstanding matured liabilities according to court decisions on enforcement, tax debt and costs of forcible tax collection, mandatory maintenance allowance, compensation for losses due to impaired health, compensation for loss of earning capacity and compensation for death of a supporter, and since 29 December 2012 also other outstanding liabilities according to the enforcement draft before the initiation of insolvency proceedings, but they do not include other outstanding liabilities from unpaid bills between creditors and debtors. 2 According to Article 55 of the Companies Act (ZGD-1), enterprises are classified as micro, small, medium-sized and large enterprises based on data from annual reports of two consecutive fiscal years. 3 The exact amounts owed by individual debtors is not evident from the list, but the list of non-payers is divided into several categories according to the amounts owed, the highest for outstanding amounts over EUR 20 m for legal entities, and between EUR 10 m and EUR 20 m for natural persons or registered natural persons. 4 Older than 90 days. 0 Table 4: Legal entities with outstanding matured liabilities for more than five consecutive days in a month, March 2013 Activity (SCA 2008) Number of legal entities with outstanding matured obligations Growth in % Average daily amount of outstanding matured liabilities, in EUR 1.000 Growth in % Average daily amount of outstanding matured liabilities per legal entity, v 1.000 EUR III 13/ III 12 I-III 13/ I-III 12 III 13/ III 12 I-III 13/ I-III 12 C Manufacturing 960 64.7 51.4 113,117 60.5 53.1 118 F Construction 1,603 53.8 38.3 175,431 -5.1 0.9 109 G Trade; maintenance and repair of motor vehicles 1,477 33.8 28.4 116,720 40.1 53.7 79 H Transportation and storage 373 27.7 27.7 28,005 3.5 -42.4 75 I Hotels and restaurants 559 46.7 34.1 25,453 32.6 29.3 46 K Financial and insurance activities 97 19.8 18.6 93,410 194.2 237.0 963 L Real estate activities 231 40.0 33.5 39,910 17.5 27.6 173 M Professional, scientific and technical activities 928 63.4 52.5 56,537 -40.0 -32.2 61 N Druge raznovrstne poslovne dejavnosti 228 65.2 53.8 23,333 2.3 2.2 102 Other activities (A,B,D,E,J,O-S) 974 45.2 31.9 51,065 -25.9 -21.9 52 SKUPAJ 7,430 47.9 37.4 722,981 13.6 16.0 97 Source: AJPES. In February construction activity remained at the same level as in the previous month. After the increase at the end of last year, the value of construction put in place declined in January. In February it maintained the same level, being 11.3% lower than in the same month of 2012. In the last year it has dropped the most in residential construction and the least in civil engineering. Total orders and the value of new contracts increased at the end of 2012 and the beginning of 2013. In February the value of the stock of contracts was slightly higher than in February 2012 (0.7%; a decline of 14.9% in 2012 as a whole), while the value of new contracts in the last three months was 4.6% higher than a year earlier. The indicator of total orders according to business trends in construction was also up at the beginning of the year. The strengthening of contracts and orders is a result of an Figure 14: Value of construction put in place increase in civil engineering works, which is, according to our estimation, related to government investment. Turnover in most trade sectors dropped further in February (seasonally adjusted). In retail trade turnover declined in all segments, particularly in the sale of automotive fuels, which lagged most notably behind the February 2012 level (by more than a tenth) due to a lower quantity of automotive fuels sold. Turnover in the sale and repair of motor vehicles stayed at January's level, but was also down year-on-year. Nominal turnover in wholesale trade also shrank, coming close to the figures in mid-2011. After growth in the previous two months, nominal turnover in market services (excluding trade)4 recorded stagnation Figure 15: Turnover in trade sectors -Retail trade, real ----- - of which automotive fuels, real -----Sale, repair of motor vehicles, real -Wholesale trade, nom. Source: SORS; calculations by IMAD. 4 Activities from H to N (SCA 2008) subject to the Council Regulation (EC) No. 1165/98 concerning short-term statistics. Box 4: The volume of road and rail freight transport In the final quarter of 2012 the strong decline in the volume of road freight transport came to a halt, while rail freight transport declined slightly again. The falling of the volume of road freight transport was a result of the winding-up of two large transport carriers and bankruptcies of some construction companies, which performed transport on own-account. In the final quarter of 2012 transport carried out by legal persons fell by more than a tenth, while transport by natural persons increased by more than a third, meaning that sole proprietors must have taken over some of the operations of the former companies. The volume of rail freight transport dropped again in the final quarter of 2012 (-3.6%, seasonally adjusted). The volumes of both road and rail freight transport are 5% below the average levels in the pre-crisis year 2008. Figure 16: The volume of road and rail freight transport -Road freight transport (left axis) -Rail freight transport (right axis) 4,300 ^^4,200 Ü 4,100 4,000 3,900 3,800 i2 3,700 3,600 3,500 3,400 Crt CD C^ ES EŠ fŠ EŠ Source: SORS; calculations by IMAD. in February (seasonally adjusted). Turnover declined only in transport services, but this was the only turnover to exceed turnover in the pre-crisis year 2008. Turnover in accommodation and food service activities rose slightly for the second month in a row after a relatively substantial fall at the end of last year, but it nevertheless remained down year-on-year. Within information-communication services, turnover in computer programming strengthened in particular (and less so in telecommunications). In the last six months its growth has been offsetting the decline in turnover in information services. Strong growth in turnover in professionaltechnical services eased. Amid the otherwise significant fluctuations in these services, turnover in legal-accounting services reached the pre-crisis level again, while turnover in architectural-engineering services was still a fifth lower despite recent growth. Figure 17: Nominal turnover in market services (excluding trade) -Total -Transportation and storage (H) -----Communication activ. (J) -----Professional, technical activ. (M) -----Accommodation and food service activities (I) m 105 !E J^jŠj^jij^jŠj^jŠj^jŠ Source: SORS; calculations by IMAD. The sentiment indicator has improved substantially since July 2012, but remains below the level that separates economic expansion from economic contraction. This trend is typical for all sub-indices with the exception of retail trade where confidence has been declining since mid 2011. The improving in most confidence indicators since mid-2012 is related to the easing of uncertainty in light of the measures taken at home (ZUJF) and abroad (ECB). Figure 18: Business trends - Economic sentiment ■ Retail trade - Construction - Manufacturing - Service activ. Consumers