Collapse of constructions market and services decline keep economy in recession in Q1

The dramatic decline of the constructions sector in the first quarter of the year, by 17.3%, as well as the continued decline of services and agriculture, have kept the economy in recession, with industry being the only sector that had a positive contribution to the GDP.

Industry saw its volume of activity rise by 4.2% as gross series compared with the first three months of last year.

"As expected, industry was the only sector to see growth in real terms in the first quarter, and we anticipate this sector will continue to have a positive contribution to GDP, considering the rise in the value of new orders in the industry sector," commented Melania Hancila, chief economist of Volksbank.

The construction sector fared the worst, reducing its volume of activity by 17.3% in the first quarter.

Hancila says the constructions sector will remain the most affected because government support measures in this sector have had a limited impact, and only managed a relative stabilisation of prices on the real estate market, with 2010 being another lost year in the long process of kicking off major infrastructure works.

GDP fell by 2.6% in the first quarter against the similar period of last year, and by 0.3% against the last quarter of 2009, according to data from the National Statistics Institute.