GDP growth: decelerating but still not bad

According to the preliminary data, GDP was up 3.2 percent in the second quarter on an annual basis, a considerable deceleration compared to the 4.2 percent seen in Q1. Yet, the seasonally and working day adjusted growth rate was 3.6 percent, only slightly lower than the 3.8 percent registered in the first quarter. (It should noted, though, that even this 3.6 percent is somewhat unimpressive in Eastern European comparison, even if higher than the EU average.) Compared to the previous month, GDP rose by 0.9 percent, well short of the 1.4 percent in Q1 but still an indicator of healthy economic growth.

The deceleration is clearly a result of flagging industrial growth, much of which was due to the negative working day effect. On the other hand, construction growth seems to maintain its very fast growth rate and, in the light of the very favorable data about tourism turnover, the expansion of services value added may have gathered speed in the second quarter.

On the expenditure side, investments are the most likely culprit behind the deceleration of GDP growth, even if the growth rate of fixed capital formation probably remained in the double-digit range. High growth rates of retail turnover suggests that private consumption – after a disappointing growth performance in Q1 – may have gathered steam in the second quarter.

On the whole, the cumulative GDP growth was 3.7 percent in the first half of the year; we expect the continuation of growth at a similar pace during the second half.