Investments: slowdown turns into decline

In the first quarter of 2015, investments contracted by 4.5%, after a period of seven quarters marked by uninterrupted growth. The decline was in large part driven by falling public investments (by 10%), while business investments decreased only at a symbolic rate of 0.7%. Business investments, however, only remained in a seemingly good shape due to manufacturing investments which posted a growth of 0.2%. Apart from manufacturing, and a small number of minor branches, investments decreased across the board at a considerable pace. In manufacturing itself, automotive investments no longer serve as a driver of growth – among manufacturing subsectors, only chemical industry and the manufacturing of machinery and equipment recorded significant growth in Q1.beruhazaseng0529

What is more, the retrospectively revised seasonally adjusted data suggests that investment activity has been actually drifting downward since the peak registered in Q1 2014. The base effect now hinders, rather than helps, the return to positive year-on-year investment growth. We expect the rate of decline of public investments abate in the coming quarters, and business investment growth rates may switch back into slightly positive territory. Yet, the direction of change of overall annual investments in 2015 is even more uncertain now in the light of the new data than it was before.