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According to data from the Central Statistical Bureau, this year's GDP in the 2nd quarter in comparable prices was 0.5% lower than a year ago. The economy continues to be affected by the geopolitical situation and uncertainty, ongoing high prices, and rising interest rates in the Eurozone. Overall, this year's GDP in the first half was 0.1% higher than a year ago.
High prices continue to impact household consumption. Although gross wages in the 2nd quarter of this year were 12% higher than a year ago, it only outpaced inflation by 0.1 percentage points. In the 2nd quarter of this year, private consumption was 1.2% lower than a year ago.
Similar to the beginning of the year, there was growth in investments in the 2nd quarter, driven by growth in the construction sector. Investments in the formation of gross fixed capital increased by 5.1% year-on-year. Investments in housing, buildings, and structures grew by 15.3%, while investments in machinery and equipment decreased by 1.8%. Investments in intellectual property products increased by only 0.1%.
The volume of goods and service exports in the 2nd quarter was 1.5% lower than a year ago. Service exports continue to recover, growing by 9.8% in the 2nd quarter of this year compared to a year ago. This growth was driven by air transport services, as well as professional and technical business services and computer services exports. The volume of goods exports in comparable prices decreased by 5.4% in the 2nd quarter. The main export items were wood and wood products, machinery and mechanical appliances, and electrical equipment and appliances. It should be noted that the volume of goods and service imports decreased faster than exports – by 2.9% and the trade balance in actual prices in the 2nd quarter was -3.8% of GDP.
From a sectoral perspective, the total added value in the 2nd quarter remained at the level of the 2nd quarter of last year. However, trends are very different by sector. There has been a decline in production sectors, largely due to deteriorating export opportunities. In the 2nd quarter of this year, manufacturing declined by 7.9%. Meanwhile, the agriculture and forestry sector saw a decline of 6%, largely due to a decrease in the crop production sector related to the unfavorable weather conditions this summer. The decline in the volume in other industries (by 5.5%) was influenced by a drop in electricity, gas supply, heat supply sector, and mining. The decrease in the volume in the transport and storage sector (by 4.9%) was affected by land transport and storage and transport support activities. There was also a decrease in the volume in the trade sector in the 2nd quarter year-on-year – by 1.6%.
On the other hand, growth in the 2nd quarter was observed in construction and most service sectors. For the second consecutive quarter, there were double-digit growth rates in the construction sector – an increase of 15.4% year-on-year provided the largest positive contribution to the economy in the 2nd quarter. Steady growth continues in sectors that were most affected by Covid-19 restrictions – in the 2nd quarter, the accommodation and catering sector grew by 4.3% year-on-year, the arts entertainment and recreation sector – by 8.7%. Stable growth continues to be observed in the ICT sector – a 10.1% increase in the 2nd quarter.
High inflation continues to limit growth, but trends will continue to vary greatly by sector. It is expected that the economic pace in the second half of the year will be very moderate, similar to what has been observed in the last four quarters.