Before the fall of the economy in the second quarter of 11.4% led to strict quarantine restrictions and declining demand, as well as reduced investment. This is stated in the report of the National Bank.
“The main factor in the deepening decline in GDP was expected to be a reduction in domestic demand. It is caused by a direct influence stringent quarantine restrictions on economic activity and indirectly – because of uncertainty about the further development of a pandemic situation. As a result, the consumer behavior of citizens has changed in the direction of reducing the purchase of non-essential goods and services and investment behavior of enterprises – in the direction of postponing business projects, “- said in a statement.
The decline in the economy was significantly affected by the decline in investment. Gross of the fixed capital formation decreased by 22.3% year on year.
“Exports of goods and services decreased (by 9% year on year), but at a much slower pace than imports. Deterioration in exports was due to the decline in agriculture, weak external demand and lower volumes of gas transit, as was stipulated in the contract with Gazprom. At the same time, weak consumer and investment demand led to a sharp decline in imports (by 23.4%), therefore, the contribution of net exports to GDP change was positive, “the statement said.
The Central Bank states that in the second quarter the performance of almost all sectors of the economy deteriorated. In addition to the significant subsidence of the agricultural sector due to the late start of the harvest, the decline deepened in industry, construction, IT, and all service sectors.
However, the National Bank expects a gradual economic recovery in the third quarter.
“This will be facilitated not only by mild quarantine conditions, but also the strengthening of external demand and the intensification of domestic consumption. However, economic activity will be constrained by the preservation of certain restrictions in the conditions of adaptive quarantine, as well as increasing the risks of further increase in the incidence of coronavirus, “- said in a statement.
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