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Domestic
demand experiencing rebound as consumption up
Even
though the Central Bank does not publish quarterly data for aggregate
demand and supply, other second quarter data indicate that private
consumption is likely to have grown at a healthy pace.
Retail sales rose 25.7% in June over the same month last year,
which was up from the 22.2% expansion observed the prior month.
The June reading brought retail sales growth in the second quarter
to 23.8% over the same quarter last year, which was down moderately from
the 29.5% expansion observed in the first quarter.
Within the retail sector, automobile sales experienced the
strongest expansion in the second quarter, growing 51.0% over the same
quarter last year.
Pharmaceuticals and medical supplies followed with a 37.5% increase
in sales.
Only domestic appliance sales dropped compared to the previous year
(-19.7% year-on-year).
Investment
on the rebound
Trade
data indicate that investment is also undergoing a robust rebound.
In the second quarter, capital goods imports rose 75.3% over the
same quarter last year.
The second quarter reading was very strong but well below the 94.6%
expansion observed in the previous quarter.
Capital good import growth was particularly pronounced in the
non-oil industry, where growth was up 127.3% over the same quarter last
year, as the oil industry experienced a much more moderate 8.3% expansion
in capital good imports.
Outlook
positive amid high oil prices and gradual domestic recovery
Consensus
Forecast participants expect economic activity to moderate further in the
second half of the year, as a stronger comparison base of last year kicks
in.
Growth is seen decelerating to 4.4% in the third and just 2.5% in
the final quarter of the year.
Nevertheless, annual GDP growth is expected to reach 10.3%, which
is up 1.2 percentage points from last month’s forecast.
Next year, the slower growth pace will carry over but the economy
is seen as picking up steam in the second half, which will lift growth to
3.5%.
Current
account
surplus rises amid stronger export growth
The
current account balance incurred a surplus of US$ 3.4 billion in the
second quarter.
The second quarter surplus was below the US$ 3.9 billion surplus
registered in the second quarter last year and below the US$ 3.7 billion
surplus observed in the first quarter.
The drop in the current account surplus over the same period last
year was mainly due to a higher deficit in the income balance, which
widened from a US$ 535 million deficit in the second quarter last year to
a US$ 1.3 billion deficit this year.
The income balance deficit was notably offset by a widening trade
surplus, which grew from US$ 5.1 billion in the second quarter 2003 to US$
5.6 billion in the second quarter 2004.
The higher trade surplus, in turn, reflected a strong increase in
exports (+32.9% year-on-year) in the wake of the stronger oil price and
rising global demand.
Imports grew at an even faster pace of 48.0%.
The second quarter current account figure lowered the annual
current account surplus modestly from US$ 14.6 billion in the first
quarter to US$ 14.0 billion.
Nonetheless, Consensus Forecast participants expect the current
narrowing trend in the current account surplus to persist through the end
of the year with the balance reaching US$ 9.6 billion.
Next year, the current account surplus is anticipated to drop
further to reach US$ 6.8 billion. |
