In the first quarter this year, the Gross Domestic Product (GDP) at market prices reached Lm465.1 million, an increase of 6.5 per cent over the corresponding period last year, the National Statistics Office reported. In real terms the GDP rose by 3.1 per cent. Gross value added was higher in all industries except agriculture, electricity, gas and water supply, and hotels and restaurants. Marked increases were registered in the fishing and financial intermediation industries.

In the period under review the Gross National Income went up by 2.5 per cent to Lm457.8 million.

GDP Production Approach: Analysis by Industry

Agriculture, hunting and forestry

During the first quarter this year, the agriculture, hunting and forestry sector registered a decline of Lm0.3 million in gross value added when compared to the same period last year. The sector’s contribution to the GDP amounted to 2.2 per cent. Compensation of employees went down by Lm0.1 million to Lm2.8 million during the period under review.

A decline in milk and meat production and a fall in the value of fresh fruit and vegetables that passed through the official markets contributed to the overall performance of this sector.

Fishing

During the first quarter of 2006, the fishing sector’s value added advanced by Lm2.3 million to Lm2.8 million. The sector’s contribution to the overall economy amounted to 0.7 per cent in the period under review. Exported wild fish contributed significantly to the overall performance of this sector during the reference period.

Mining and quarrying

In nominal terms, the contribution of the mining and quarrying sector to value added remained practically unchanged at Lm1.5 million, representing 0.4 per cent of total gross value added. The industry’s compensation of employees increased by 4.8 per cent while operating surplus also went up marginally

Manufacturing

The manufacturing sector’s contribution to gross value added increased from Lm67.6 million to Lm69.7 million over the same quarter last year, an increase of 3.2 per cent.

Compensation of employees went up by 0.3 per cent over the same quarter last year.

There was a marked improvement in the performance of the manufacture of other non-metallic mineral products, a sub-sector very much linked to construction activity, with an increase of 12.8 per cent in gross value added. As a result of restructuring, the manufacture of chemicals, chemical products and man-made fibres contributed to an increase in gross value added of Lm2 million over the same quarter last year.

Other sub-sectors which contributed positively to the GDP included the manufacture of transport equipment, with an increase of 19.2 per cent, and the manufacture of electrical and optical equipment,with an increase of 7 per cent. The layoffs in the manufacture of textile and textile products and the manufacture of leather and leather products sub-sectors contributed to a fall of 21.8 per cent in gross value added. Other sub-sectors which contributed negatively to the GDP included the manufacturing of food products, beverages and tobacco, with a fall of 3.8 per cent; the manufacturing of pulp, paper and paper products’ publishing and printing with a drop of 15 per cent; and the manufacturing of machinery and equipment which declined by 4.7 per cent.

Overall, the manufacturing sector’s share of the GDP (at basic prices) declined from 17.9 per cent last year to 17.6 per cent this year.

Electricity, gas and water supply

The electricity, gas and water supply’s share of total gross value added declined to 1 per cent from 1.5 per cent in the same quarter last year. This industry’s gross value added registered a drop of Lm1.4 million or 24.8 per cent. Output advanced by Lm10.1 million or 24.8 per cent. The rise in the fuel surcharge on water and electricity consumption contributed to this increase. The surcharge stood at 17 per cent during the first quarter last year; this increased to 47.5 per cent (in January and February 2006) and 67.5 per cent (in March 2006).

In addition, the maximum capping in water and electricity consumption costs for factories and hotels which was set at Lm5,000 during the first quarter last year, stood at Lm21,000 during the first quarter of 2006 following a revision in November 2005. Intermediate consumption increased by Lm11.4 million or 32.5 per cent, when compared to the same quarter last year, mainly as a result of increasing oil prices. Compensation of employees declined by Lm0.3 million or 5.8 per cent to Lm4.8 million.

Construction

The contribution of the gross value added by the construction industry edged up to 5.3 per cent during the quarter under review when compared to 5.2 per cent during the corresponding quarter last year. The gross value added attributable to this industry went up by Lm1.3 million to Lm20.9 million, representing an improvement of 6.7 per cent over the same quarter last year. The compensation of employees increased by 5.2 per cent, while the operating surplus showed an improvement of 10 per cent.

Wholesale and retail trade; repair of motor vehicles, motorcycles and personal and household goods

Value added generated by the wholesale and retail trade industry increased by 3.8 per cent over the corresponding quarter last year. Compensation paid to employees increased by 0.4 per cent over this same period. The contribution of this industry to the total gross value added at basic prices fell from 12.1 per cent in the first quarter of 2005 to 11.9 per cent in 2006. Revisions in this industry have been undertaken on the basis of a more reliable source of employment data.

Hotels and restaurants

The gross value added of the hotels and restaurants industry decreased by 0.9 per cent or Lm0.1 million from Lm15.6 million to Lm15.4 million over the same quarter last year. Total output generated by this industry decreased by 1.9 per cent or Lm0.7 million and intermediate consumption fell by 2.7 per cent or Lm0.5 million.

Operating losses more than doubled over the same period last year. This industry’s contribution to the total economy’s value added at basic prices fell from 4.1 to 3.9 per cent.

Transport, storage and communication

The contribution of the transport, storage and communication sector to the GDP went down from 9.5 to 9.3 per cent. The gross value added attributable to this industry grew by 2.5 per cent, or Lm0.9 million, from Lm35.8 million to Lm36.7 million. Such an increase was reflected in the supporting and auxiliary transport activities sub-sector and in the telecommunication sub-sector registering an increase of 4.5 per cent and 6.6 per cent respectively, while the remaining sub-sectors recorded a drop of 4.3 per cent or Lm0.5 million over the first quarter of 2005. This overall increase in gross value added reflected positively in the industry’s compensation of employees by Lm2.3 million and negatively in the gross operating surplus by Lm2.4 million.

Financial intermediation

The financial intermediation sector contributed towards an increase in value added of Lm6.4 million, with its share of the GDP rising from 3.7 per cent to 5.1 per cent. Value added in the banking sub-sector expanded by Lm5.5 million while value added in the other sub-sectors increased by Lm0.9 million. Employment income within this sector rose by 8.4 per cent or Lm1.1 million following a slight increase in the employment level while gross operating surplus increased by Lm5 million.

Real estate, renting and business activities

Value added generated by the real estate, renting and business activities sectors registered a 2.7 per cent growth rate. This increase in gross value added is also reflected in higher compensation of employees which rose by 3.0 per cent. The contribution to total value added of this industry fell from 14.2 per cent in the first quarter of 2005 to 13.8 per cent in the corresponding period in 2006.

Public administration and defence; compulsory social security

The gross value added of the public administration and defence sector increased by Lm1.8 million or 5.7 per cent. Compared to the first quarter of 2005, the following changes were recorded under wages and salaries: the extra budgetary units (+Lm0.02 million), local councils (–Lm0.05 million), and government ministries and departments (+Lm1.1 million). The gross value added of this sector amounted to Lm33.7 million; and this sector’s relative contribution to the total gross value added amounted to 8.5 per cent.

Education

The education industry registered an increase in value added of 4.1 per cent over that recorded in the first quarter last year. The government was the major driving force behind this rate of growth in gross value added for this industry, contributing to around 82 per cent of this increase. The contribution to total gross value added at basic prices by this industry decreased from 7.6 per cent to 7.5 per cent over this period.

Health and social work

The gross value added of health and social work activities increased by 5.7 per cent or Lm1.5 million from Lm26.3 million to Lm27.8 million. Total output generated by this industry rose by 13.1 per cent or Lm4.3 million from Lm33 million to Lm37.3 million.

There was an increase in intermediate consumption of 42.1 per cent, to Lm9.5 million. This was due to higher government expenditure on pharmaceuticals. Compensation of employees rose by 5.9 per cent or Lm1.2 million from Lm19.9 million to Lm21.1 million. This industry’s contribution to the total economy remained practically unchanged at 7 per cent.

Other community, social and personal service activities

The value added generated by enterprises in the other community, social and personal services activities increased by 3.2 per cent or Lm0.7 million, from Lm22.3 million to Lm23 million over the first quarter last year.

Compensation of employees decreased by 1.7 per cent or Lm0.2 million. The share of value added of this industry decreased by 0.1 per cent to 5.8 per cent.