Extraordinary GDP growth in Q1

According to the preliminary data, GDP expanded by a whopping 5.3 percent year-on-year in the first quarter of 2019, a rate well above the expectations of most forecasters. The seasonally and working day adjusted growth rate was almost identical with the unadjusted data, 5.2 percent. The quarter-on-quarter growth rate – 1.5 percent – is also outstanding.

According to the CSO, industry, construction and market services were the main drivers of growth. But first of all, the neckbraking pace of construction output growth – about 48 percent, on an annual basis, according to the sectoral statistics – was the factor that pushed GDP growth well above 5 percent. On the expenditure side, accordingly, fixed capital formation probably expanded at a pace well above expectations.

In the light of the fist-quarter numbers, annual GDP growth forecast probably needs revision. In a best-case scenario, the growth rate of GDP may even approach 4.5 percent in 2019 as a whole.

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