The main driver behind the strong growth of 1.5% in the first quarter of this year was buoyant domestic demand, thanks especially to brisk job creation. In addition, with improved capacity utilization, companies stepped up investment considerably.
However, given the increase in commodity prices, which has taken a nasty chunk out of purchasing power, momentum is likely to slow as the year progresses. The growth rate is likely to slow to around 0.5% in the second quarter. But over the year as a whole gross domestic product growth is now likely to come in at 3% at least.