The Gross Domestic Product fell by 8.8 per cent in the third quarter of this year, when compared to the same period of 2019.

According to provisional estimates by the National Statistics Office, the GDP dropped by €312.6 million, amounting to €3,221.3 million by the end of September.

In a statement, the NSO said that net taxes on products contributed negatively towards GDP growth with a decline of 27.3 per cent in volume terms.

Data published on Friday shows that during this same period, Gross Value Added (GVA) fell by seven per cent in nominal terms and by 7.7 per cent in volume terms.

This significant drop is mainly attributed to a decrease of 9.1 per cent in the services sector.

This drop was, in turn, mainly driven by accommodation and food service activities (-58 per cent), transportation and storage activities (-38.0 per cent); administrative and support services activities (-16.8 per cent), wholesale and retail trade activities (-13.4 per cent), professional, scientific and technical activities (-7.9 per cent) and real estate activities (-3.3 per cent).

Construction and the agriculture and fishing sectors also saw a decline of 1.6 and 5.6 per cent respectively. 

The expenditure approach

The expenditure approach is another method used to calculate GDP. This is done by adding the consumption expenditure of households, general government and non-profit institutions serving households, gross capital formation and net exports.

During the third quarter of 2020, the final consumption expenditure witnessed an annual increase of 0.5 per cent in nominal terms and a drop of 0.8 per cent in volume terms.

The latter was the result of a decrease in household expenditure of 7.2 per cent, which was partly offset by an increase in the expenditure of non-profit institutions of 2.1 per cent and a rise in general government expenditure of 17.6 per cent.

The income approach

The income approach shows how GDP is distributed among compensation of employees, operating surplus of enterprises and taxes on production and imports net of subsidies. 

Compared to the third quarter of 2019, the €312.6 million decrease in GDP in nominal terms was primarily a result of a €14.2 million decrease in compensation of employees, a €73.9 million decline in gross operating surplus and mixed-income, and a drop of €224.5 million in net taxation on production and imports.