Gross Domestic Product – flash estimates
According to NSI flash estimates, GDP increased by 4.8% yoy s.a. in Q2 2022, fuelled by final consumption which went up by 5.3%. Export and import increased by 11.8% and 18% yoy, respectively, while gross fixed capital formation decreased by 7.3% over the same period a year earlier.
Short-term Business Statistics
In June, the growth of short-term indicators slowed down. Industrial production grew by 17.5% and its growth was driven by the production of energy and metal products. The slowdown was due to smaller contribution from manufacture of machinery and equipment. Industrial turnover growth stood at 77.1% yoy with energy and food products contributing the most, followed by basic metals. The construction production index fell by 0.4% due to a decline in civil engineering. The growth of retail trade turnover was just 0.1%, with a decline in trade with food products.
In July, the business climate indicator remained almost unchanged, while the consumer confidence improved. There were better expectations for the business situation of the enterprises in industry and retail trade, whereas the expectations in services and construction were more reserved. Consumer confi[1]dence went up by 2.5 points mostly due to stronger intentions to make major pur[1]chases over the next 12 months.
Labour market
According to the Labour Force Survey data (LFS), labour market indicators kept improving in the second quarter of 2022. Employment (15-64) increased by 1.8% over the same period a year earlier and the employment rate reached 69.8% of the labour force. The unemployment rate (15-64) was 4.7%, which was 1 pp lower compared to the second quarter of the previous year. The seasonal increase in employment did not occur to the same extent as seen in the years before the COVID-19 pandemic. This was possibly due to lower expectations for the tourist inflow from abroad during the summer months of the year, as well as the employment reduction in the public sector in line with the ongoing restructuring in the administration.
Wages
The country’s wage increased by a double-digit rate in Q2 2022. The average wage in the economy grew by 13.4% yoy in nominal terms. Recent wage dynamics accelerated compared to the first three months of the year (9.8% yoy) and continued to offset the observed increase in consumer prices. Real wage, deflated by HICP, remained unchanged on a year earlier. Similar to the first quarter, recent developments were largely driven by private sector dynamics (up by 15.4% yoy). However, wages in the public sector also gained speed (up by 7.8%). The upward wage dynamic was broadly supported by almost all activities. The highest increases were reported by administrative and support service activities (up by 21% yoy), followed by wholesale and retail trade (up by 18% yoy). By contrast, human health and social work activities posted the lowest rate of increase, up by 0.8% yoy.
Financial Sector
Credit to the private sector accelerated further in June and grew by 12.6% yoy vs. 11.2% a month earlier. Both households and non-financial companies contributed to these dynamics in line with the positive developments in labour market, private consumption and exports in Q2 2022. Despite the still weak investment activity, the growth of credit to corporations has been accelerating since the beginning of the year, driven mainly by the overdraft. This reflects the increased demand for working capital on the background of significantly increased production costs due to more expensive raw materials. NFC credit growth reached 10.6% yoy with overdraft up by 22.8% yoy vs. 5.6% at end-2021.
The low nominal interest rates environment coupled with rising inflation contributed to the sustained high demand for credit from households (up by 14.7% yoy). During the first half of the year, there was an increase in consumer loans which accelerated to 13% at the end of June (12.3% in May). Demand for housing loans also remained elevated (up by 18.2%), while the continued increase in real estate prices had an impact on the latter.