Private services and consumption saved GDP growth in Q1

The new detailed data did not alter the aggregate picture about the first quarter: GDP grew by 2.2 percent on a year-on-year basis (2 percent after seasonal and working day adjustment), while the quarter-on-quarter change was a decrease of 0.4 percent.

On the production side, industrial growth and especially construction growth decelerated sharply, even though the GDP data shows at least a little positive growth, as opposed to the stagnation shown by the gross output data provided by sectoral statistics. Services also grew by 2.4 percent, a much slower pace than earlier, but this was primarily the result of the fall in the value-added of public services, while market services grew at a relatively good pace.

On the expenditure side, mostly strong consumption growth kept up economic growth, while fixed capital formation declined. Nevertheless, overall capital formation expanded, due to the change in inventories. As a result, total final domestic use grew by more than 4 percent. A part of this was, however, offset by the negative growth contribution of the external trade of goods and services. In the case of the trade of services, this is a new and unwelcome phenomenon due to the collapse of the inflow of foreign tourists.

In the coming quarters, consumption growth will become negative, along with overall domestic demand. We expect the GDP to contract by more than 5 percent in 2020.