Recent Economic Developments: an overview
• Economic activity maintained its growth momentum in 2022 with real GDP rising by 5.9%, mainly driven by private consumption, but also due to gross fixed capital formation and exports of services growth. Nevertheless, the rise in exports of services prices induced a weaker than expected real exports of services growth outcome. The fall in government consumption and the increase in imports weighed on GDP growth.
• Inflation accelerated in 2022 (recording an average rise of 9.3%), mainly driven by increases in energy and food prices, also feeding through to core inflation. Inflationary pressures eased in the last three months of last year because of retreating energy prices. Continuing the trend recorded in the last quarter of 2022, headline inflation declined further to 5.4% in March 2023 from 6.5% in February, driven by the significant drop in energy prices but also because of decelerating rates in processed food items and in services. Core inflation remained unchanged at 8.2% in March 2023.
• In the housing market, apartment prices continued to increase at an accelerating pace in 2022 (11.1%, from 7.6% in 2021).
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