Gross Domestic Product (GDP) – Third Quarter 2019

The “Central Statistical Bureau” published GDP figures at fixed prices for the third quarter of 2019. Analyzing these numbers is important in two aspects: the first is to follow their development in terms of their growth i.e. the economic expansion or contraction and the second is monitoring the growth within the components of that output to spot its strengths or weaknesses. More importantly, perhaps, is to follow the impact of public policies on reforming structural economic imbalances.

These figures, at fixed prices -real growth- estimate that positive growth of 0.4% has been achieved between the third quarter of 2018 and the third quarter of 2019. But what has been achieved was negative growth by -0.7% between the second quarter  and  the  third quarter of 2019 due to deflation of non-oil sectors by -0.9% and the deflation of oil sectors by -0.6%. The positive growth between the third quarter of 2018 and the third quarter of 2019 was achieved mostly from the superiority of the non-oil sectors that grew by 7.8%, while the overall growth rate decreased to 0.4% as we mentioned due to the negative performance of the oil sector in that growth which contracted by -5.3%.

What does not seem healthy is that none of  the  economic  sustainability  policies  -diversification of income sources- declared in all development plans and in all governmental data has been achieved. The truth is that the productive structural imbalance as indicated by the dominance of the oil sector on GDP components continues, as we have noted, due to its overwhelming effect on the newly published figures.

The contribution of the oil sector to fixed prices is still more than half the size of the GDP; it scored around 56.2% in the third quarter of 2018 and decreased to 53.0% in the third quarter of 2019. This means that the contribution of all other sectors in the third quarter of 2019 amounted to 47.0%, which is an unsustainable contribution but it is strongly supported by the oil sector whose volatile contribution is linked only to oil prices and production, and not to the industrial growth. 

The second highest contribution to GDP components was public administration, defense, and social security at 11.1%, and the sector is irrelevant to any developmental approach. 

The draft public budget for the fiscal year 2020/2021 whose total figures were published the last week -to be presented in a later paragraph- shows that financial sustainability, the other component of the structural imbalance, will lead to further imbalance, i.e. deeper gap.