Astonishing leap in business investments

140530_Beruh_ENThe recent report of the CSO shows not just a surprisingly dynamic growth of overall investments in the first quarter of 2014 but also an unexpectedly favourable composition of this growth. Instead of a slowdown following the the strong growth in Q4 2013 (14.9%), investments grew at an even higher rate – 22.6% – in the first quarter. Even more importantly, public investments were not the main driving factor this time; instead, the astonishingly robust growth of business investments (26.4%) lead the investment growth. At the same time, public investments grew by 13.5% year-on-year, a respectable growth rate in itself, but also a massive slowdown compared to the 50.8% registered in the previous quarter.

This outstanding growth of corporate investments suggests the possibility of self-sustaining investment growth in the private sector, which can sustain good investment performance even if the public investment boom wears off. It will be seen whether or not this is true – anyway, in the light of the new data, the overall annual rate of investment growth in 2014 is likely to be higher than previously expected: even assuming a significant slowdown in the second half of the year (especially in public investments) it will probably exceed 8%.

140530_Beruh_3_ENThis newly gained momentum in business investments is far from uniform in the economic branches: in two of the most important branches (in terms of the volume of investments), namely wholesale and retail trade on the one hand and real estate activities on the other, investments decreased compared to the first quarter of 2013. Even so, the rate of decrease remained modest (apart from the plummeting registered in mining and quarrying), while in several branches that saw growing investment this growth was very robust. The most important of such branches is manufacturing that exhibited an investment growth rate of almost 28% in Q1, mainly due to the sub-branches related to the automotive industry.