LJUBLJANA: Economic growth in Slovenia slowed to 3.8 percent year-on-year in the second quarter of 2018 from 4.5 percent in the previous quarter as investment and household spending slackened, the statistics office said on Friday.
The government's macroeconomic institute UMAR said it plans to revise its 2018 GDP forecast downward by the middle of September from its March forecast of 5.1 percent GDP growth this year versus 4.9 percent in 2017.
"Economic activity in the first half of the year has slowed down a bit more than expected, which indicates lower economic growth than last year," the institute said in a statement.
GDP growth in the first half of 2018 reached 4.2 percent and analysts forecast a slowdown in the coming months due to likely reduced growth among Slovenia's main trading partners.
Analysts also cited planned tax increases by the incoming centre-left government as a drag on growth in the near future.
"Companies fear that the new government will significantly raise taxes which would be very bad for the economy and would reduce future investments and thus cut the number of new jobs," Goran Novkovic, executive director of the Slovenian Business Club, told Reuters.
Slovenia held a general election in June but the party that won the most votes, the anti-immigrant centre-right Slovenian Democratic Party, lacked partners to form a ruling coalition.
Earlier in August, several centre-left parties elected Marjan Sarec as prime minister-designate and his minority government is due to be confirmed by parliament in the first half of September.
The coalition agreement of five centre-left parties signed on Wednesday suggests taxes will be raised significantly to shore up the national pension and health systems while keeping a balanced state budget.
On Thursday Akrapovic, a producer of exhaust systems for motorcycles and cars, said it would pay higher dividends than planned this year to avoid possible higher taxes on capital.
The statisics office also said investment rose by 2.9 percent in the second quarter, well down from 14.6 percent in the previous one, while household spending rose 1.1 percent compared with 3.3 percent in the first three months of 2018.
Exports, the main driver of the small euro zone economy, increased by 9.3 percent after a 8.7 percent rise in the first quarter. Slovenia exports about 70 percent of its products, mainly to other European Union states.
The jobless rate fell to 5.2 percent in the second quarter, its lowest in almost 10 years.
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