Economy remains patchy in November 2018

The economy remained patchy in November as in previous months notes the latest issue of ‘Economy: Facts, Assessments and Comments’, a BoR commentary. Whereas consumer demand revived against the backdrop of lending growth and the upcoming VAT rise, investment and production activity remained muted.

Annual growth in industrial production dropped to 2.4% in November 2018 vs 3.7% in October. This was caused by the calendar effect making a zero contribution in November and contributing 0.6 pp in October. According to various estimates, the month-on-month industrial output (adjusted for seasonality and calendar effects) was close to previous month readings.

In November, the investment activity was muted with its individual indicators giving mixed signals. On the one hand, the output of engineering products continued to decline month on month, seasonally adjusted. On the other hand, the recovery in construction gained ground.

Consumer demand expanded in November. Retail trade turnover showed acceleration. This was assisted by the ongoing trend towards an increase in household lending and a somewhat reduced propensity to save. Growth in demand could be in part driven by the expected surge in inflation in early 2019 on the back of the VAT rate hike.