MAY 16, 2018


Bottom line: Déjà vu all over again. The boom in vehicle imports is back, stronger than (almost) ever. That made consumption and investment the twin drivers of growth, while imports surged three times as much as exports, so that the external sector once  again dragged growth down instead of contributing to it.


  • Gross Domestic Product (GDP) expanded at an annualised (and seasonally-adjusted) rate of 4.2% in Q1 (January-March) 2018. This is the same pace of growth as H2 of 2017, but much faster than in Q1 of 2017 (only 0.8%).
  • The rate of growth in the business sector (i.e. net of the public sector and NGOs) was even faster, at 5.2% — the fastest since Q4 2016.
  • Growth was once again an entirely domestic phenomenon, although private and public consumption, as well as investments, were all important contributors.
  • On the other hand, the vehicle import boom meant that imports grew much faster than exports — where expansion slowed to 7.2% from 10%+ in the two previous quarters (although net of diamonds and start-ups, growth was 11.4%).
  • Private consumption growth was very high at 10%, but this stemmed almost entirely from a 95% (!!) quarter-on-quarter leap in per capita consumption of durable goods — in practice, car purchases.
  • Government consumption was also strong — up 11.3% — thanks to heavy purchases of defence imports.
  • The 20.3% rise (q-o-q) in gross fixed capital formation was also a vehicles story — residential building dropped over 15%, while investment in plant and equipment (in practice, cars, trucks, buses, etc.) rose 43% q-o-q (!! again).
  • Residential construction has now fallen for four successive quarters, with the rate of decline rising in each successive quarter — a grim comment on the state of the constructions ector.
  • Productivity is estimated to have posted a small rise of 0.4% — better than the miniscule 0.1% increase of 2016, but still worryingly low.


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