GDP decreased by 5.7% in 2020, when compared to 2019

Provisional estimates indicate that the Gross Domestic Product (GDP) for 2020 amounted to €12,823.8 million, registering a decrease of €768.4 million, or 5.7%, when compared to 2019.

Gross Domestic Product (GDP) is an estimate of the value of goods and services at market prices produced in the economy over a period of time. The GDP is estimated at current prices using the production approach, aggregating the output of the various productive sectors net of the cost of intermediate inputs. The expenditure approach is reconciled with the production approach and is used to derive an estimate of GDP in volume terms, in other words, excluding the effects of price inflation on market prices. The income approach shows how GDP is distributed into compensation of employees, operating surplus of enterprises and taxes on production and imports net of subsidies.

The production approach

During 2020, Gross Value Added (GVA) fell by 4.3% in nominal terms and 5.8% in volume terms, when compared to 2019. This contraction in GVA was mainly due to a drop of 6.7% in Services in volume terms. Industry and Agriculture and fishing declined by 1.0% and 10.7% respectively. An increase of 2.9% was registered in Construction. The drop in Services was mainly driven by the following sectors: Accommodation and food service activities (-64.7%); Transportation and storage activities (43.1%); Wholesale and retail trade activities (-9.9%); and Administrative and support services activities (-10.7%). Services activities which contributed positively to GVA included: Information and communication activities (13.6%); Arts, entertainment, and recreation activities (10%); Financial and insurance activities (3.9%); and Public administration (5.5%) . Net taxes on products contributed negatively towards GDP growth with a decline of 17.1% in volume terms.

The expenditure approach

The expenditure approach is another method used to calculate GDP and is derived by adding final consumption expenditure of households, general government and non-profit institutions serving households, gross capital formation and net exports. During 2020, total final consumption expenditure witnessed an increase of 0.4% in nominal terms and a drop of 1.1% in volume terms.

The latter was the result of a decrease in household expenditure of 7.9%, which was partly offset by an increase in the expenditure of non-profit institutions serving households of 3.5% and a rise in general government expenditure of 16.1%.

Gross fixed capital formation (GFCF) declined by 3.6% in nominal terms and 4.5% in volume terms.

The income approach

The third approach to measure economic activity is the income approach, which shows how GDP is distributed among compensation of employees, operating surplus of enterprises and taxes on production and imports net of subsidies. Compared to 2019, the

€768.4 million decrease in GDP in nominal terms was primarily a result of a €137.8 million increase in compensation of employees, a €216.8 million decline in gross operating surplus and mixed income, and a drop of €689.4 million in net taxation on production and imports.

Gross National Income (GNI)

The GNI differs from the GDP measure in terms of net compensation receipts, net property income receivable and net taxes receivable on production and imports from abroad. Considering the effects of income and taxation paid and received by residents to and from the rest of the world, GNI at market prices for 2020 was estimated at €11,669.9 million.