The economy of the SR grew by 1.4% in the 4^th quarter and by 3% for the whole year 2021, but the losses from the first year of the pandemic have not yet erased

In the last three months of 2021, half of the 10 monitored sectors in the economy were already above the level of pre-covid performance, trade was the most successful. In total, for the whole year 2021, GDP lagged behind the pre-pandemic values by 1.5%, and performance of manufacturing industry was even lower, by up to 7.4%.

In the 4^th quarter of 2021, the gross domestic product (GDP) of the SR increased by 1.4% year-on-year (at constant prices, not seasonally adjusted). Economic development remained in positive numbers throughout 2021, but mainly under the influence of the lower comparable base for 2020, when the economy was in the negative numbers in all quarters. While at the beginning of 2021, foreign demand still was a driving force, in the third and fourth quarters of the year it was mainly domestic demand.

On a quarter-on-quarter basis (compared with the third quarter of 2021), seasonally adjusted GDP was 0.3% higher in real terms. The volume of GDP reached EUR 25.6 billion (at current prices). To assess whether the economy has already overcome the damage caused by the pandemic, it is important to compare GDP values at constant prices. They present that the economy still lag behind the level of the last quarter of 2019, namely by less than EUR 100 million.

According to the ESA 2010 methodology, GDP is quantified in three ways (production method, expenditure method, pension method). Given the available sources of information, the production method is decisive for the SR.

Production method

In the 4^th quarter of 2021, performance of the economy was slightly higher than a year ago, gross value added reached almost EUR 22.7 billion. This decisive component of GDP recorded a slight year-on-year growth of 0.5%. Performance of the sector was only slightly lower (1.1%) than before the pandemic (in the 4^th quarter of 2019).

In total, as for the 10 sectors of the economy, five reached a year-on-year increase in gross value added, as well as five sectors exceeded the pre-covid level. The second most important sectors - wholesale, retail trade; transportation and storage; accommodation and food services - achieved significant year-on-year growth (11%) and, mainly due to a growth of internal trade (4.2%), thus exceeded the pre-pandemic period by almost 0.6%. Higher performance was also recorded in construction, which grew by 2.4% year-on-year and exceeded the pre-covid level by 2.9%. Professional, scientific and technical activities also exceeded the level of 2019 by 11.9%.

Manufacturing industry, the sector with the largest share of 26.8% of the total performance of the economy, fell by 1.4%, year on year, in the fourth quarter. However, compared to the pre-pandemic level (4^th quarter of 2019), the performance was even lower by 5.5%. Development in the structure of manufacturing was fluctuating, a rise in the value added was recorded in several manufacturing activities, such as manufacture of metal structures by 5.2%, manufacture of electrical equipment by 5.5% and manufacture of machinery and equipment by almost 15%.

The year-on-year decline in value added continued in financial and insurance activities by 26.2%; real estate activities by 5%; agriculture, forestry and fishing by 1.9%.

Expenditure method

In the fourth quarter, positive development of the economy was mainly the result of the impact of domestic demand, which currently grew by 3.2% for the third consecutive quarter at the end of the year. The development of domestic demand was decisively influenced by the growing final consumption of households by 2.8% and, after a decline in the third quarter, the growing final consumption of public administration by 2.1%. Investment activity - gross fixed capital formation - rose again by 6% after declining in the third quarter.

Foreign demand, t. j. exports of goods and services, which declined after a considerable rise in the third quarter, started again in the fourth quarter and turned in positive values by 1.6%. However, despite the seemingly modest relative growth, the volume of exports of goods and services was the highest in the last quarter. Imports of goods and services also continued to increase, up to 3.5%, and the foreign trade balance thus reached the negative numbers to the level of almost EUR 619 million.

Pension method

As for the generated GDP¹⁾, remuneration of employes²⁾ amounted to EUR 11.9 billion. Compared to the 4^th quarter of 2020, their volume increased by 5.6%. Gross operating surplus and mixed income in the amount of EUR 10.8 billion increased by 4.1%. The volume of taxes collected from production and imports rose by 9.4% to EUR 3.3 billion. The value of subsidies was higher by 18.7% and reached EUR 503.7 million.

Gross domestic product for the whole year 2021

In total, in 2021, GDP reached a nominal value of EUR 97.1 billion and increased by 3% year-on-year (at constant prices). Individual sectors of the economy thus began to compensate for the downturn in the first year of the pandemic (2020), when the whole economy of the SR declined by 4.4%. However, the total value of GDP at constant prices continued to lag behind the pre-covid period (2019) by 1.5%.

GDP formation was related to a year-on-year increase in value added by 2.4%. Last year, compared to 2020, only 4 sectors of the economy recorded a growth in gross value added, the most significantly in manufacturing industry by 8.1%. The most dynamic year-on-year increase in manufacturing industry was in manufacture of motor vehicles by 22.4% and in manufacture of metal structures by 20.2%. However, the manufacturing industry as a whole has not yet reached the pre-covid level of performance (2019), it lag behind by around 7.4%.

In the results for 2021, three other sectors also grew year-on-year - wholesale, retail trade; transportation and storage; accommodation and food services by 6.3%, information and communication by 2% and slightly also public administration, defense, health and social work activities by 0.8%. The other six sectors continued to decline, the most significantly in construction by 4.9%, arts and entertainment by 5.6% or agriculture by 6.9%.

The downturns caused by the pandemic have already been completely overcome by 5 sectors - public administration, defense, compulsory social security; education; health and social work activities  by 5.3%, professional, scientific and technical activities; administrative service activities by 5%, real estate activities by 3.3%, information and communication by 2.8% and wholesale and retail trade, repair of motor vehicles and motorcycles; transportation and storage; accommodation and food services by 0.2%.

Other sectors still did not overcome the losses caused by the pandemic, they lag behind the performance of 2019 from 2.9% (agriculture) to 27.7% (arts, entertainment and recreation).

In 2021, all components of expenditures were in positive values. Foreign demand rose by 10.2%, year-on-year, and also imports of goods and services by 11.2%. Domestic demand increased by 3.8% due to a growth in gross capital formation by 13.9%, of which gross fixed capital formation increased by 0.6%. All components of final consumption, household final consumption expenditure grew by 1.1%, public administration expenditure by 1.9% and expenditure in non-profit institutions serving households by 4.3%.