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Slovenians still fearful despite economic growth
KOMEN, Slovenia, May 31, 2018 (BSS/AFP) – As Slovenia prepares to head to
the polls on Sunday, the government of outgoing Prime Minister Miro Cerar
could be forgiven for expecting a dividend for the country’s strong economic
recovery.
And yet the parties in the ruling coalition are lagging far behind in the
polls as the campaign enters its final stretch.
Small business owner Valter Makovec provides a clue as to why.
His family-run furniture company is one of the small and medium
enterprises that account for almost two-thirds of GDP and it’s doing better
than ever, almost doubling revenue since 2015 to around two million euros.
That mirrors Slovenia’s impressive economic growth as a whole, with GDP
growing 5.5 percent in 2017.
But 61-year-old Makovec is loath to give politicians any of the credit for
his firm’s recovery.
“I’ve stopped listening to political promises, most of it is hollow
election rhetoric… I don’t think the outcome will have any impact on
business,” Makovec told AFP, in between fielding production-related questions
from his daughter Polona.
And he still fears a repeat of the crisis that hung over the country for
the best part of a decade and which almost sank him.
“Our market collapsed in only three months,” Makovec says, recalling the
round of layoffs the company was forced into and struggles to pay monthly
bills.
– Not feeling the benefit –
The hard times kicked in following the 2008 global financial crisis, which
crippled the banking sector of the “Switzerland of the Balkans” as huge
amounts of bad debt came to light.
In 2013, Slovenia narrowly avoided having to seek a bailout along the
lines of Greece and adopted a programme of swingeing austerity and
privatisations.
In recent years, that seems to have paid off, with the government finally
boasting a modest budget surplus last year and unemployment coming back down
to 5.2 percent, roughly where it was before the crisis.
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That’s also reflected in Makovec’s business, which now employs more people
than it did before 2008.
However, government cuts to welfare and public sector wages meant that
“many Slovenians didn’t have the impression of benefiting from growth,”
according to Rosvita Pesek, political journalist with RTV public television.
Recent government moves to relax austerity have not been enough to stave
off a wave of public-sector strikes or to save its position in the polls.
– Clouds on the horizon? –
While Makovec doesn’t think politicians need thanking for the turnaround
in his fortunes, he knows what did save his business.
“We started from scratch… (and) decided we should find new customers
abroad,” he says.
A contract with a high-end British furniture designer followed, as well as
a booming trade in making gambling tables for customers abroad.
Exports have been key to securing Slovenia’s recovery and increased by
10.6 percent in 2017, with 9.2 percent growth forecast for this year.
Car giant Renault and pharmaceuticals company Novartis both have an
important presence in Slovenia, and are geared almost solely to exports.
But Hermina Vidovic, an economist at the Vienna Institute for
International Economic Studies, warns that Slovenia’s reliance on foreign
trade could leave it exposed to developments in other economies.
The recovery was down to “the favourable economic environment in Europe,
particularly in Slovenia’s main trading partners,” she told AFP.
“As long as the external conditions remain supportive of economic growth,
the forthcoming elections will not have any decisive impact on the Slovenian
economy,” Vidovic said.
Nevertheless, the European Commission is urging Slovenia to press on with
reforms to its health and pension systems, to increase employment among low-
skilled and older workers and to cut down on bureaucratic burdens.
Vidovic also says the multi-party coalition government that polls suggest
will be needed after Sunday’s elections “might hamper the speeding up of
reforms”.
Back in Komen, Makovec is closely watching events abroad to see what they
augur for his business.
“I am concerned by trends in the gambling market, the growth is too
strong, it reminds me of 2005 and 2006,” he says, wringing his hands.
“The gambling market points the way,” he says, fearing that the rest of
the economy will follow.
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