Annual report - HSE

2.6 Market position
2.6.1 Features of the Slovenian economic environment
Decrease in GDP
In 2012, the real decrease in the Slovenian GDP amounted to 2.3%, mostly as a result of
decreased domestic consumption at private, as well as at the national level.
Investment continued to drop as well. Smaller domestic demand reflects also in
international transactions; import of goods and services was lower by 6.6% compared with
2011, while export remained unchanged.
Annual inflation
The year-on-year inflation in Slovenia amounted to 2.7% at the year-end, which exceeded
the Eurozone average. Fluctuation of prices was caused predominantly by week economic
activity, locally and globally. Higher year-on-year inflation was mostly a result of higher
prices of food, services and energy products, but also of higher excise duties.
Credit crunch
Decreased lending to the domestic non-banking sector intensified at the end of the year,
while net repayment of the Slovenian banks’ liabilities to international organisations
continued.
Electricity consumption
General consumption of electricity in 2012 decreased by 1% compared to the previous
period.
Decrease in economically active population
The unemployment rate increased once again. The average number of unemployed in
2012 was 90,000, which is 6000 more than in 2011.
2.6.2 Market environment of the electricity industry
In 2012, the European economy faced escalation of the its debt crisis, which reached the
peak in the summer when the required rate of return on 10-year Spanish and Italian bonds
amounted to 7.7% and 6.6%, respectively. After the speech of the ECB president Mario
Draghi on 26 July 2012, when he made a commitment that the ECB will do ‘whatever it
takes to preserve the euro’, the situation on financial markets calmed down and the
pressure regarding the value of bonds issued by problematic countries slightly decreased
by the end of the year. Due to great debt, measured according to GDP share, the Eurozone
members bound to adopt strict general government saving measures. This resulted in
reduced demand for final products and the Eurozone economy recorded a 0.9% GDP
decrease, despite stable economic circumstances in the USA and China.
All this affected the impaired euro currencies against American dollar, which on one hand
improved the competitiveness of European exporters in the global market, while on the
other hand it increased the prices of energy products within the EU quoted in American
dollars. Decreased demand caused a significant drop in the Eurozone industrial production,
which on annual basis amounted to -2.2%, resulting in reduced electricity consumption in
2012.
With regard to the transmission of electricity across Slovene borders, we should mention
that the Slovene transmission network operator, ELES, in accordance with the European
directive concerning the allocation of cross-border transmission capacities, continued with
market-based allocation of cross-border transmission capacities through explicit auctions.
The allocation of daily cross-border transfer capabilities to Slovenian-Italian border was
Annual Report HSE 2012
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