Don’t Panic!

As of Monday the Government Institute for Macroeconomic Analysis and Development – the aptly named IMAD – published new forecasts for Slovenian economic growth.

PM Borut Pahor and finance minister Franci Križanič (brushed up from source)

Growth? Think again…

IMAD predicts that Slovenian economy will shrink by 4 percent in 2009, which would apparently be the largest economic downturn in history of independent Slovenia. Apparently even independence itself and consequent loss of Yugoslav markets didn’t hit Slovenian economy as bad as this. New unemployment projections now show that as much as 100,000 people might find themselves being laid off, which would bring unemployment to about 9 percent.

Admittedly, the people at IMAD are not the quickest of cats at the best of times (its former director some three years ago famously said that there is no way for a price of a barrel of oil to go above 100 dollars) and they have maintained until recently that Slovenia will experience minimal growth, but this prediction is a much-needed reality check. It means that the government of Borut Pahor will have to dig deeper, faster and harder than anything we’ve seen to date.

Among other things this means that rebalancing of the budget which the parliament is expected to approve today is more or less worthless and that finance minister Franci Križanič and his team will have to go – in the words of Wile E. Coyote – back to the old drawing board. When asked about it last week, Križanič said that the crisis will turn in the middle of this year. The problem is that he sounded as if the crisis must turn in the middle of the year. As if they just spent their last bullet.

PM Borut Pahor adopted a hitchiker’s attitude as is saying (in nice, big, friendly letters): Don’t panic!. Some quasi-experts think otherwise and say it’s time to panic. Both pieces of advice are wonderfully useless.


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Agent provocateur and an occasional scribe.

6 thoughts on “Don’t Panic!”

  1. Unfortunately, this is a worldwide crisis, so Slovenija is hit just as hard as any other country. Governments everywhere in Europe will have to dig deeper and are rebalancing budgets. I don’t know how the national budget fares over there, but over here it is by now accepted that there is a deficit of 3%, still less than big economic EU giants France and, especially, Germany.

    As for Križanič’s comment that the crisis will turn in the middle of the year : this is probably something he picked up from leading economists who predicted, not that the crisis would be over by the middle of the year, but that it would reach its peak by then and would slowly start to change for the better near the end of the year. Others speak of a crisis which would likely last for the next TEN years. A whole different ballgame, methinks…

  2. I agree… But the 3% deficit was reached before the drop in GDP was announced. It ain’t gonna be pretty.

    BTW: IMF announced today that recovery will begin next year at the earliest.

  3. Heh, quasi-experts 🙂 Pray tell, who is a real expert then? Will the real expert please stand up?

    The truth is that nobody can tell you the future. If someone is giving you a precise date by which this thing will be over, they are full of shit. Sure, they might end up making a lucky guess, but that doesn’t count.

    The good advice is “If you panic, panic early”. It means having a contingency plan – what will you do if you lose your job? Where are your savings? Are you healthy? These seem like simple and obvious questions, but people tend to forget about them and take things for granted. In the months/years ahead the answers to these questions will be important.

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