According to the quick assessment of gross domestic product by the Central Statistical Bureau, in Q4 this year gross domestic product (GDP) at constant prices (unadjusted data) was 0.7% higher than a year ago. In Q1, GDP was affected by a drop in manufacturing sectors, as well as growth in services sectors and product tax revenues.
Although GDP growth in Q1 has been relatively moderate, it is evaluated positively given the high geopolitical uncertainty in the region and the high level of prices.
Weaker performance in manufacturing sectors was already expected in Q1. Output volumes of the manufacturing sector in the first two months of this year were by 3.2% lower than a year ago. The volumes of wood processing, manufacture of non-metallic mineral products, printing and chemical industry decreased. At the same time, there are also positive trends in manufacturing – a rise at the beginning of the year was observed in manufacture of food, computes, electronic and optical products, as well as electrical equipment. In January-February this year, a drop in volumes was observed in mining and quarrying (by 24.4%), as well as in electricity and gas supply (by 8.7%).
Industry trends also affect export volumes of goods. Overall, in the first two months of this year, exports of goods at current prices exceeded the level of January-February last year by 5.9%. Given that at the beginning of the year the price index of export goods was within 8%, this means that export volumes of goods at constant prices have decreased slightly year on year.
Growth in service sectors shows that despite high prices, positive private consumption dynamics remain. In January-February this year, retail sales were 3.1% higher than in January-February last year. At the beginning of the year, air transport, accommodation and food service activities, as well as ICT sectors also had positive growth rates.
Geopolitical uncertainty and high prices are expected to continue to affect economic development and are likely to maintain moderate economic growth rates in the first half of the year. The Ministry of Economics forecasts that GDP will grow by 0.8% in 2023.