Slovenia exports, industry output rise in August

By Marja Novak

LJUBLJANA, Oct 10 (Reuters) - Slovenia's exports andindustry picked up in August, raising hopes it can avoid askingfor a bailout just as the country prepares to make its secondattempt this year to sell bonds internationally.

Exports, the main driver of the Slovenian economy, rose by2.5 percent year-on-year, the first increase in four months, thestatistics office reported on Wednesday. Industrial outputjumped by 4.2 percent, the biggest annual rise in 15 months.

"These figures are positive and give me optimism thatSlovenia will be able to avoid a bailout, providing it managesto raise money in bonds or by privatisation in the near future,"said Jure Vrhunec of Raiffeisen Bank.

Slovenia plans to issue a $1.5 billion 10-year bond in thenext few weeks after postponing a similar issue in euros inApril because the yield demanded exceeded 5 percent.

Yields have since climbed further amid speculation thatSlovenia could become the sixth euro zone state to apply for abailout. The yield on Slovenia's benchmark 10-year bond peakedat 7.6 percent in August, and was 6.1 percent on Wednesday,according to Reuters data.

"Export and industry data show that everything is not black... but Slovenia has to simultaneously enforce a number ofreforms to win back market confidence," said Matej Tomazin, headof investment firm KD Skladi.

The conservative government of Prime Minister Janez Jansaplans to raise the retirement age and enact laws to increaselabour market flexibility by the end of the year.

It also plans to establish a new state company that wouldtake over bad debts of local banks, which now amount to some 6.5billion euros or 18 percent of GDP, and another that will manageall state assets and speed up privatisation.

But the government has yet to reach agreement on the newreform laws with trade unions and the centre-left opposition,seen as crucial to avoid possible referendums that couldpostpone or reject reforms.

Slovenia, an exporter of cars, car parts, pharmaceuticalsand household appliances, was the fastest growing euro zonemember in 2007 but was badly hit by the global crisis due to itsdependency on exports.

After a mild recovery in 2010 and 2011, the governmentexpects the economy to contract by 2 percent this year and byanother 1.4 percent in 2013 due to lower export demand and afall in domestic consumption amid budget cuts.

(Reporting by Marja Novak; Editing by Catherine Evans)


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