The economy grew in the second quarter by 2.1% compared to the first quarter, although economic indicators they didn’t offer at all such a good development. Statistica detailed in a press release on Wednesday why we grew more than expected.

Economists were surprised by the rosy numbers the INS sent out, with some suggesting the INS had revised the first-quarter data down or that the deflator was in the middle, making the data look better than estimates based on real-time indicators.

What the INS said in a press release Wednesday:

“The following industries made a more significant positive contribution to GDP growth in the first half of 2022 compared to the first half of 2021:

• Wholesale and retail trade; repair of motor vehicles and motorcycles; transport and storage; hotels and restaurants (+2.2%), with a weight of 20.6% in the formation of GDP and the volume of which increased by 10.3%;

• Information and communications (+1.7%), with a weight of 6.9% in the formation of GDP and the volume of which activity increased by 23.9%.

• Negative contribution GDP growth was recorded by industry (-0.2%), which has a weight of 25.3% in the formation of GDP and the volume of whose activity decreased by -0.1%;

Net product taxes with a weight of 10.4% in the formation of GDP made +0.5% of GDP growth, their volume increased by 5.2%.

In terms of GDP usage, the increase was mainly due to:

• household final consumption expenditures, the volume of which increased by 7.6%, the contribution to GDP growth was +4.7%;

• gross accumulation of fixed capital, the volume of which increased by 2.2%, the contribution to GDP growth was +0.5%.

Negative contribution net exports (-3.9%) contributed to the formation of GDP, which is the result of an increase in the volume of imports of goods and services by 14.3% compared to an increase in the volume of exports of goods and services by 7.7%.

What did the indicators show when the INS provided signal data on GDP for the second quarter

• Population consumptionas measured by retail trade (which accounts for 70% of GDP), slowed in the first half to 5.2% (from 5.7%) amid high inflation, which is forcing people to be more cautious when shopping and making purchases. According to BRD’s report to investors, household consumption is increasingly defueling, given the drain on pandemic savings, falling purchasing power, significantly tighter financial conditions and rising uncertainty. Therefore, the document also notes, it may be difficult for this private consumption to maintain positive dynamics, especially if there are changes in taxation and conditions on the labor market deteriorate..

• Industrial production it also declined slightly in the first half of the year, with negative monthly figures. In June, the reduction was almost 5% compared to May 2022. The manufacturing sector faces a number of obstacles – from a noticeable slowdown in economic activity in the Eurozone (the main export destination) to the war in Ukraine, which exacerbates existing problems (lack of components, prices for raw materials, etc.). for key industries such as automotive and related industries.

• Construction activity slowed down quite a lot in the first 4 months, after May a timid recovery was recorded (although engineering constructions still remained in the red). This cannot be forgotten rising costs of living, interest rates, and housing prices, in turn, affect the demand for housing.

• Instead, the lifting of pandemic-related restrictions in early March 2022 contributed to accelerated dynamism services market intended for companies (25% growth in the first 5 months) and intended for households (almost 40% growth in the first 5 months).

Latvia, Lithuania and Portugal experienced economic decline in the second quarter, according to Eurostat data, while Germany recorded economic stagnation (0% growth).