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Saturday, April 13, 2024

Economists: Billions of losses are expected if the government does not act!

By: Ana Horvat (Nova24tv.si)

“The joke is slowly over,” Marko Drobnič, president of the Talum board, said at the round table of businessmen and experts. Slovenian economists are extremely worried about the sharp drop in orders in Slovenian industry and claim that the annual losses will be more than one billion added value and 200 million euros in taxes if the economy is not protected by measures. This type of warning from businessmen about the uncompetitiveness of the Slovenian economy on the global market is not the first, but Golob’s government still did nothing. Minister Bojan Kumer also participated in the round table, who even last June announced appropriate aid measures and timely action, but judging by the public announcement, he said much less.

Among the reasons for the poor state of the economy, experts pointed to excessively high electricity prices and demanded comparable measures to deal with the energy crisis as in other EU countries. According to the economist Dr Igor Masten from the Faculty of Economics of the University of Ljubljana, Slovenia still records inflation above 9 percent, with the average return to inflation targets being 4 to 5 years long, which means a possible improvement only in 2027. The “state aid” instrument is of key importance, with which, unlike China and the USA, Europe has “moral problems”, according to Dr Mojmir Mrak from the Faculty of Economics of the University of Ljubljana, “Europe will have to change the system of state aid and loosen it”, and the TZS strongly doubts the correctness of the economic policy of the current government, which they consider to be destructive.

“The joke is slowly over,” said Marko Drobnič, president of Talum’s board, who pointed out the drastic drop in orders and emphasised that the drop can be felt not only at the global, but also at the European level. “Will we take a protectionist approach and protect this industry in Slovenia as well, following the example of other countries, or will we just make the decision that this industry will no longer exist?” said Drobnič and at the same time commented on the difference in energy price conditions between European countries, highlighting German aid measures. Matjaž Čemažar, director of Domel, also confirmed the lack of competitiveness on the European and global market. He said that he left the production of magnets for his products to China, but they also need copper, the processing of which is more expensive in the EU than in China. Production of primary aluminium has also been abandoned in Slovenia and it is imported, while iron and steel are twice as expensive in the EU as in China due to the energy-intensive industry and high energy prices.

According to GZS data, in the period from October last year to March this year, industrial production shrank to 10 from 24 manufacturing activities. More than a 10 percent drop in production was recorded in the paper industry (-18 percent), production of chemical products (-17 percent), metals (-11 percent), furniture (-11 percent), and wood processing (-11 percent). It is an alarming fact that the activities that recorded a drop in industrial production in the last half of the year, higher than 5 percent, represent almost 40 percent of the total industrial production. According to TZS calculations based on data from Surs, a significant drop in real revenues can be seen since the last quarter of last year compared to the same period of the previous year in some trade categories. In retail trade, real income in March this year compared to last year fell by 12.8 percent, in retail trade without motor fuels by 9.3 percent, in retail trade with foodstuffs by 8.3 percent, and in retail trade with non-food products by 11.1 percent. The declines are also visible in this year’s quarter compared to the same period last year.

State-led economic policies are headed for destruction

David Kovačič, director of Spar Slovenija Ltd., emphasised the increasing costs of labour, construction work and energy that retailers face. Both merchants and, on the other hand, consumers face high costs, and the latter are also less likely to spend due to the resulting bad mood. Aleš Pulko, director of Pulko Ventili Ruše, agrees that lost competitiveness will be a big problem in the future, while Toni Balažič, director of Panvita, pointed out the prices of higher energy products, who also blames higher labour costs for non-competitiveness, which is why he is convinced that an agreement is necessary at the country level. Tibor Šimonka, the president of GZS, called for the formation of a consensus on the importance of the industry, which must be protected urgently, while the president of TZS emphasised that the government should be more concerned with food security. She questioned the correctness of the economic policies led by the state, “this goes in the direction of destroying everyone in the chain, from the farmer to the trader and everyone in between”.

The government’s measures do not make it easier, but at most make it more difficult for a successful economy

The round table was a “call for help”, said Marko Lotrič, president of ZDOPS, who notes that all the announced reforms foresee only additional burdens on the economy, but not measures that would allow it to “breathe more easily”. His words referred to the fighting words of Minister Bojan Kumer, who said “that the economy is the lungs of development and that they must be filled with oxygen”. Let us remind you that Kumer said last July that GZS accepted them after five weeks of the government’s oath, saying that they “were quick” in being ready to talk. At the time, Kumer said that the government had set a priority to take care of vulnerable groups first, and to “leave the economists for last”.

As we are used to from Golob’s government, Kumer also spoke indirectly about “timelines” and “addressing problems” with measures, of which apparently nothing has happened so far. Moreover, as Lotrič said, the government’s measures only added to the burden on the economy and not the other way around. The increase in labour costs with salary increases, new tax reform and additional taxation, new laws in agriculture, high prices of both energy and other goods – literally not a single measure made it easier for businessmen to operate, at most it buried them even more in the mud.

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