Economic Activity and Natural Gas as a Potential Destabilizer of the Slovenian Economy

This article empirically investigates whether natural gas has the potential of destabilizing the Slovenian economy. The results confirmed the indirect relation that the increase in gas prices decelerates the dynamics of aggregate domestic consumption, which further decelerates activities in individual industries. An empirical analysis has proven that the natural gas does have the potential of forecasting the production trends in individual industries within the Slovenian economy. By using the dynamics of natural gas price movements (and other explanatory variables), we can forecast the dynamics of movements in the production of textiles, leather, fur and clothes, rubber and plastic-based products, metals, furniture, as well as in the processing industry, recycling, electricity, natural gas, steam and hot water supplies in Slovenia. The obtained results suggest that natural gas price shocks can influence economic activity beyond those explained by direct input cost effects and via the indirect effect of possibly delaying the purchase of goods.