May 29 (SeeNews) - Slovenia's economic output contracted by a real 2.3% year-on-year in the first quarter of 2020, largely undershooting analyst expectations for zero growth, Erste Bank Group said on Friday.
"Despite economic activity having solid entry into 2020, situation took rapid turn for the worse as COVID19 pandemic escalated, with first toll visible in 1Q20 figures," Erste said in an instant comment, following the release of first-quarter GDP data by Slovenia's statistical office.
The strongest drag on the first-quarter GDP came from domestic demand, with both private consumption and investment activity declining significantly, by 6.4% and 6.3% on the year, respectively, Erste noted.
At the same time, net exports had a positive contribution of 0.5 pps to the headline figure, as imports declined faster than exports, by 2.5% and 1.6% on the year, respectively.
Going forward, the corona-virus containment measures are expected to have a strongest impact on the economic growth in the second half of 2020, the analysts said, adding that domestic demand will be seriously weakened by lower private consumption as labour market conditions worsen and consumer sentiment declines.
Moreover, external demand will also remain subdued, considering the deteriorating growth prospects of EU markets, Erste said.
"Thus, we expect economy to bring double-digit decline in 2Q20, before starting to gradually bounce back from 2H20 onward. Taking into account the latest GDP figures, we see economy contracting in the high single-digit region, with risks pronounced to the downside and highly dependent on the extent of 2Q decline," it noted.
The statistical office said earlier on Friday that in quarterly terms, the Slovenian GDP was down 4.5% in January-March.
Slovenia's economy is expected to shrink by some 7 or 8% this year, impacted by the coronavirus pandemic, according to forecasts by the European Commission, the IMF and the country's government.