Q2 GDP reaches €3,475.3 million, 14.8 per cent higher than 2020

Provisional estimates indicate that the Gross Domestic Product (GDP) for the second quarter of 2021 amounted to €3,475.3 million, registering an increase of €448.6 million, or 14.8 per cent, when compared to the same quarter of 2020. In volume terms, GDP rose by 13.4 per cent, following the drop of 15.0 per cent registered a year earlier as a result of the pandemic.

During the second quarter of 2021, Gross Value Added (GVA) rose by 13.8 per cent in nominal terms and 12.3 per cent in volume terms, when compared to same quarter of 2020.

The main drivers behind this 12.3 per cent growth were Service activities (NACE sections G to U),  Industry (NACE Sections B to E), and Construction (NACE Section F), with a contribution of 10.7 percentage points, 1.4 percentage points and 0.1 percentage points, respectively. Agriculture and fishing (NACE Section A) had a neutral impact on GVA growth. All these sectors registered an increase in GVA. A 12.6 per cent increase was recorded in Service activities, 14.5 per cent in Industry, 2.3 per cent in Construction and 8.4 per cent in Agriculture and fishing activities.

The increase in Services was mainly driven by the following sectors: Wholesale and retail trade, repair of motor vehicles and motorcycles (21.2 per cent); Arts, entertainment, and recreation activities (17.2 per cent); Financial and insurance activities (11.6 per cent); Information and communication activities (9.8 per cent); and Accommodation and food service activities (165.4 per cent).

Net taxes on products contributed positively towards GDP growth with an increase of 23.9 per cent in volume terms.

The expenditure approach

The expenditure approach is another method used to calculate GDP and is derived by adding final consumption expenditure of Households, Non-Profit Institutions Serving Households (NPISH) and General government, Gross Capital Formation (GCF) and Net exports.

The contribution of domestic demand to the year-on-year GDP growth rate in volume terms was of 11.8 percentage points, of which 5.8 were due to Final consumption expenditure and 5.9 to Gross capital formation. External demand also registered a positive contribution of 1.6 percentage points, with 15.5 percentage points attributable to exports, and 13.9 percentage points explained by imports.

In the second quarter of 2021, Total final consumption expenditure witnessed an increase of 8.9 per cent in volume terms. This was the result of an increase both in Household expenditure and in NPISH expenditure, with 15.2 per cent and 2.2 per cent respectively. However, this was offset by a decrease in General government expenditure of 1.7 per cent.

Gross Fixed Capital Formation (GFCF) rose by 23.6 per cent in volume terms. This increase was mainly attributable to investment in transport equipment. Exports and imports of goods and services in volume terms increased by 10.7 per cent and 10.3 per cent respectively.

The income approach

The third approach to measure economic activity is the income approach, which shows how GDP is distributed among compensation of employees, operating surplus of enterprises and taxes on production and imports net of subsidies.

Compared to the second quarter of 2020, the €448.6 million increase in nominal GDP was the result of a rise in all the sub-components of the income approach, with an increase of €120.7 million in Compensation of employees, €227.5 million in Gross operating surplus and mixed income, and €100.3 million in Net taxation on production and imports.

Gross National Income (GNI)

The GNI differs from the GDP measure in terms of net compensation receipts, net property income receivable and net taxes receivable on production and imports from abroad.

Considering the effects of income and taxation paid and received by residents to and from the rest of the world, GNI at market prices for the second quarter of 2021 was estimated at €3,169.8 million.