Investments: another drastic plunge

The second quarter saw the fall in investments by 20.3% year-on-year, which came as a negative surprise compared to the expected decrease of 9-10%. As a result, investments dropped by an average 17.3% in the first half of 2016.  In the light of the new data, the annual average decrease in investments is likely to get close to, or even reach, 10% in 2016.

On the other hand, the structure of the decrease can be see as relatively benign. An overwhelming part of the drop was due to the economic branches heavily affected by the temporary hiatus in the inflow of EU funds: most prominently, transport investments fell by a whopping 65%. At the same time, manufacturing investments, after three quarters of decline, grew by almost 11% in Q2, which suggests that investments were not hit so much by a general lack of motivation to invest among companies but rather by a temporary backlash following the record levels of absorption of EU funds in the last year. If not by the end of 2016, than in 2017 overall investments is likely to turn into modest growth, even if this year will be marred by the very slow start in the allocation of the EU funds connected to the present programming period.