THE Central Bank’s monetary policy report up to May 2024, released on Friday, said the energy sector is expected to continue on a downward trajectory this year. The report added that there was a noticeable dip in economic activity in the third quarter of last year, but indicators monitored by the Central Bank are suggesting a rebound for the final quarter of that year and the first quarter of 2024.

The report said economic growth in the third quarter of 2023 was hindered by low output in the energy sector. Taking data from the CSO, Central Bank said real GDP fell by 2.3 per cent year-on-year because of an overall 10.3 contraction in the energy sector.

The report said petroleum support services fell by 34.8 per cent. Natural gas exploration and extraction fell by 11.3 per cent. Refining, including liquefied natural gas dropped by 11 per cent. Condensate extraction went down by 10.2 per cent.

Petrochemical manufacturing also went down by 9.9 per cent and crude oil exploration and extraction went down by nine per cent.

The report said all sub-sectors also experienced contractions except the asphalt sub sector, which saw a 20.5 per cent improvement.

Sales in the construction materials and hardware sector fell by 16.1 per cent and reduced local sales of cement point to a contraction in the construction sector by 2.9 per cent. Manufacturing also contracted by 2.1 per cent.

The downward trajectory of the energy sector is expected to continue in 2024. Looking at preliminary data from the Ministry of Energy, Central Bank said crude oil production fell by 10.4 per cent and natural gas production dipped by 1.4 per cent for the first quarter of the year, when compared to the same period in 2023.

Methanol and ammonia production also fell by 3.8 and 2.4 per cent respectively

However, despite upstream setbacks, natural gas liquids production remained resilient, recording a 16.3 per cent improvement year-on-year.

The non-energy sector picked up the flag, driving economic activity in the fourth quarter of 2023 and the first quarter of 2024.

The sector was supported by growth in the trade and repairs sector by 11.7 per cent, the financial and insurance activities sector by 1.6 per cent, the accommodation and food services sector by 1.5 per cent and domestic services by one per cent.

Central Bank said the CSO’s retail sales index suggested improved economic activity with retail sales expanding by 4.8 per cent, textiles and wearing apparel by 6.2 per cent, household appliances, furniture and other furnishings by 4.7 per cent and a 1.5 per cent increase in the sale of dry goods.

The sectors strong activity was also seen in an uptick in supplementary indicators in the first quarter of 2024, with cashless payments increasing by 6.9 per cent coming from an increase in the volume of ATM and internet banking transactions. Transportation and storage remained strong with a 7.1 per cent increase supported by air travel.

The report added that wholesale and retail trade excluding energy increased by 5.8 per cent and e