The economic growth (of the Gross domestic Product) stood at a level of around 6.5% in the first half of this year, estimated Varujan Vosganian, Economy and Finance Minister yesterday, according to Mediafax.
The minister said the economy had picked up the pace in the second quarter, after witnessing an increase of only 6% in the first quarter. The overall economy increased by 7.4% in the first half of last year, thanks to the better than expected performance of the industry.
In the end, industry continued to increase significantly in the first half of this year. Industrial output increased by 6.8% in May, rebounding from a mere 2.3% rate registered in April. The industrial output maintained above the official estimates for the first five months, posting a 6.4% growth according to the national Statistics Institute.
In its spring bulletin, the National Forecast Commission (CNP) estimated that industrial output would increase by 5.8% this year, slightly down on last year, when it saw an increase of 7.1%. Although the official estimates reveal a possible slowdown, in 2007 industry started out better than in the previous year registering a 6.4% growth rate for the first five months, compared with only 5.9% in 2006.
This year, not only the industrial sector is doing much better than expected, but also the construction sector.
The real growth rate (above inflation) for the first five months of the construction market stood at 31.8%, double that registered at the same time last year. For 2007, the construction sector is witnessing one of the highest growth rates of the last seventeen years, with the market approaching 9 billion euros, compared with last year's 6.5 billion euros.
On the other hand, retail, which is indicative of consumer spending, posted a much lower growth rate than last year. Retail sales only increased by 7.6% in the first five months, three times slower than the 25.1% level in the same period of 2006.
Agriculture stands all the chances of doing worse than last year, due to extreme weather conditions. A lot of land and crops have already been affected, although the first assessment of the losses can only be made in August, after the first summer harvest.
Although Vosganian estimates a 6.5% economic growth for the first half, the National Statistics Institute will publish the official data in September.
In the first quarter, the economy was held back by the poor collection of indirect taxes (VAT and excise duties) and by the really slow growth of the retail sector, compared with last year's growth, despite the better than expected performance of the industry and constructions sectors.
Vosganian explained that gross added value to the economy increased by 8.1% in the first quarter, which means that the GDP could have risen at the same rate, had it not been for the budgetary revenues that held back the progress of the other branches.
All in all, the official forecast expects a 6.5% economic growth rate for the entire year, compared with 7.7% last year. These estimates will be revised in August and September, once the preliminary autumn bulletin of the CNP is released.
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