In February 2012, the production index of basic industries grew by 2.8% on an annualized basis and by 3% over January-February 2012, compared with the corresponding period of the previous year.

The weak external demand against the backdrop of recession in the euro area is a key factor behind the restrained economic activity, which appears to be higher than in most European countries. An additional factor determining low economic growth was a low comparison basis of the previous year. The output of metallurgy industry declined by 3.8% on annualized basis, whereas that of machine building rose by 0.2%.

The factor offsetting losses incurred by the economy in the external markets is high domestic consumer demand driven by a steady rise in wages in the context of low inflation. An upward trend in real wages, which grew by 8.7% in 2011 and by 14.4% in January on annualized basis fueled a year-on-year increase in retail trade turnover (by 15.4%) and the volume of services rendered (by 13.9%) in February.

A drastic fall in the air temperature at the beginning of the month triggered a decline in the volume of transportation services. The freight shipment dropped by 1.8% year on year in February, which was an additional factor behind the deterioration in the performance indicators of metallurgy industry and machine building. Unusually cold weather impeded the work carried out on the construction sites. Therefore, in spite of the fast growth of capital expenditures, the volume of construction works dropped by 3% year on year in February.

On the other hand, the weather conditions contributed to an increase in the production and distribution of electric power, gas and water (by 12.3% year on year), which resulted in 3 p.p. industrial output growth and 1.6 p.p. growth in the production index of basic industries.

According to estimates made by the Department, year-on-year GDP growth stood at 2% in February.