March 31 (SeeNews) - The coronavirus outbreak will take a higher toll on Slovenia's economy than the 2008 financial crisis did, as the country's economy is estimated to shrink by between 6.2% and 16.1% in 2020, the central bank said on Tuesday.
The estimates are based on three scenarios considered by the central bank that assume a different number of weeks, i.e. 6, 10 and 14 weeks respectively, for the ongoing economic lock-down, Banka Slovenije said in a statement.
According to the analysis, private consumption will drop between 2.4% and 9.0% on annual level, depending on the different scenarios, with the most pronounced decline expected in the second quarter of the year.
Employment will shrink between 1.8% and 4.7%, while the unemployment rate could more than double.
At the same time, prices could drop by an average 1%, the central bank said.
Under the projections, the mere GDP drop will result in raising Slovenia's public debt level to 70-80% of GDP, the analysis noted, adding that these estimates do not include the government's fiscal response to the crisis that will on one hand, increase the nominal value of debt but on the other hand will somewhat mitigate the drop of the economic activity.
"The launch of the new investment cycle will depend on the ability of both companies and banks to survive the period of the restrictive measures," Banka Slovenije said.
It added that domestic banks have enough liquid funds to endure the worst case scenario, which could deprive them of some 2.0 billion euro worth of cash flow in case all companies ask for a deferral of loan payments hit by the coronavirus. The cash flow shortage in this case will be equivalent to 35% of the primary liquidity.