By: dr Metod Berlec
In the latest issue of Demokracija magazine, the main topic discusses the Gross Domestic Product (GDP), which increased by 2.5 percent last year in real terms, not by 5.4 percent as initially estimated. Last year’s GDP growth was thus significantly lower than the initial estimate and considerably slower than the post-pandemic 8.2 percent growth in 2021. As reported in the magazine by our journalist Vida Kocjan, the Statistical Office of the Republic of Slovenia (SURS) recently made a significant change in the data regarding the level and growth of GDP for the year 2022.
If just weeks ago it was believed that the GDP in 2022 amounted to 58,989 million euros, after SURS’ correction, it is now 1,951 million euros lower, totalling 57,038 million euros. In other words, nearly 2,000 million euros (two billion) have seemingly disappeared into thin air. Former Prime Minister Janez Janša immediately took to social media to question how this was possible and what impact it would have on budget planning, directed at the previous government, SURS, and the Bank of Slovenia. We also asked these institutions the same questions. You can read their responses below. However, it is already clear that this is not good news for both domestic and foreign audiences, as financial markets are particularly sensitive to such changes.
In the main interview, we discussed this with Dr Davorin Kračun, the President of the Fiscal Council, who says that in principle, this means “the base from which the state calculates tax revenues is lower, and as a result, actual revenues can also be lower”. Dr Kračun points out the deficit in the state budget, which has been increasing month by month. “The deficit is not surprising. /…/ According to the Fiscal Council’s estimates, the expansionary fiscal policy in the current cyclical conditions is not suitable. /…/ At the same time, for the fourth year in a row, there has been a high growth in public spending, even if we do not consider the extensive intervention measures that were adopted in response to various crises. What is particularly concerning is that various discretionary measures have been adopted since 2020 by different governments, unrelated to crises and with exclusively negative consequences for the sustainability of public finances.” Additionally, it is worrisome that there are no encouraging forecasts coming from Brussels either. On Monday, the European Commission lowered its economic growth forecast for the European Union for this year from 1.0 to 0.8 percent and for the eurozone from 1.1 to 0.8 percent. It also reduced the forecast for 2024, from 1.7 to 1.4 percent for the EU and from 1.6 to 1.3 percent for the eurozone. Undoubtedly, this is a result of the EU’s misguided energy policy led by Germany, the so-called green transition, the war in Ukraine, and more could be listed. In Slovenia, we have the additional misfortune of having Golob’s neo-socialist government in power, which is unwisely suffocating the economy with additional tax measures. In short, in financial and economic terms, there is nothing promising in store for us in the coming months.
Another significant problem faced by both Slovenia and the European Union is the increasing influx of illegal migration. Monday’s excerpt from the overview of events by the Novo Mesto Police Directorate informs us that we are dealing with a veritable migrant invasion. Between September 8th and 11th, the police in the Brežice area (Dobova, Obrežje, Sela pri Dobovi, Rigonce, Podgračeno, Ločje, Vrhje, Rakovec, Kapele, Velika Dolina, Jesenice na Dolenjskem, Kapele, Mali Obrež, Mostec, Brežice) and in the Krško area identified and apprehended 1,075 foreigners who had entered Slovenia illegally (480 Afghans, 235 Moroccans, 100 Pakistanis, 54 Bangladeshis, 41 Turks, 29 Syrians, 29 Russians, 20 Algerians, 13 Indians, 12 Sri Lankans, 11 Iraqis, 11 Nepalis, 9 Burundians, 7 Iranians, 4 Palestinians, 4 Sudanese, 3 Eritreans, 3 Congolese, 2 Egyptians, 2 Tunisians, 2 from Sierra Leone, and 1 Cameroonian, Ghanaian, Lebanese, and Senegalese). Police procedures with these foreigners are not yet completed. In short, our southern border has become entirely permeable with Croatia joining the Schengen area, the removal of border controls, and the dismantling of protective fences. Illegal migrants enter our country without difficulty and then abuse the asylum system, as detailed in the magazine. Fortunately, they continue their journey westward, one could cynically add. But this is a poor consolation, as an increasing number of them are staying in our country as well. The future does not look promising.