The sectors of finance, insurance, trade, and transportation significantly drove the growth of the Gross Domestic Product (GDP) in the first quarter of this year, which increased by 2.9 percent compared to the same period last year. However, a shadow is cast on these positive trends by a decline in industrial activity in the manufacturing sector by about five percent.
According to data from the Republika Srpska Institute of Statistics, the GDP of Srpska in the first quarter of this year, expressed in current prices, amounted to approximately 3.64 billion KM, representing a real growth of 2.9 percent, while the nominal increase was 7.3 percent compared to the same quarter last year.
Statisticians also calculated that the gross added value in the first quarter of this year amounted to 2.9 billion KM, while the value of taxes on products, reduced by subsidies, was 732.12 million KM.
- The highest growth in gross added value was in the financial and insurance sectors, at 8.8 percent, closely followed by the sectors of trade, transportation and storage, accommodation, food preparation and serving, hospitality, and catering with a growth of 8.1 percent in the first quarter – according to the Institute of Statistics.
The largest decline in gross added value of 5.1 percent was recorded in the manufacturing industry, and there was also less economic activity in the sectors of mining and quarrying, production and supply of electricity, and activities related to water supply, sewerage, and waste management.
Economic analyst Saša Stevanović told “Glas” that the real economic growth in the first quarter is above the average economic growth over the last 15 years, i.e., the last sixty quarters.
- This real economic growth is occurring when our largest foreign trade partners, Italy and Germany, are experiencing economic growth rates of 0.7 percent and 0.2 percent, respectively. If we consider the entire European market, the economic growth is higher than the real growth of the entire EU – Stevanović emphasized.
What can be further analyzed, Stevanović notes, is the relationship between nominal growth in current and previous year prices, and that higher growth is expressed in previous year prices.
- This could be an indicator of deflation, which is not good for economic activity, but it is good that the economic growth of the first quarter is higher than the average growth of the first quarters compared to the crisis years of 2009 and 2012, when it was negative, and it is almost ten times better compared to the real growth during the flood year of 2014. These are years of crisis, and it is evident that something positive and different was done. We can already see that the fear in the first quarter was not justified – Stevanović believes and adds that attention should be directed towards deflation and measures that are adapted to reality.
The president of the Chamber of Commerce of Republika Srpska, Pero Ćorić, told “Glas” that the positive trends at the beginning of the year are encouraging, but that Srpska should not compare its percentages with highly developed countries because it has an extremely low GDP both in total and per capita.
- What is concerning is the decline in the manufacturing industry, which was expected given the trade deficit that in the first four months amounts to almost 700 million. This is concerning in terms of how long the service industries can drive GDP growth considering that services are practically tied to activities stemming from the manufacturing industry, where new value is created – said Ćorić and added that everyone hopes for a recovery in the manufacturing industry, especially export-oriented sectors.
ECONOMIC LAW
Saša Stevanović says that the real economic growth in the first quarter is greater than what the economic law of the convergence criterion indicates.
- When a lower income system cooperates with a higher income system, the smaller system grows on average by two percent. Our growth is greater than those two percent, and if we compare the EU and our small economic system, the difference is 2.5 percent. It is not enough, it can be much better, but it is above the average of one percent. It may all seem small, but compound interest calculations show that if we are one percent better every day compared to yesterday, we are three and a half times better people than the previous 365 days – Stevanović explained vividly.
Source: Glas Srpske
