With credit extended to households shifting from relatively low interest (and lower margin) mortgages to more profitable (higher margin) categories, it is not surprising that the real value added in the financial sector also increased by a cumulative 9.5 percent since 2011q1 – on par with the real growth recorded in the retail sector.
In fact the retail and finance sectors together contributed almost 60 percent of GDP growth since 2011q1 – significantly larger than their 37 percent share in GDP. The growing size of the non-tradeables sector may also explain a weakening economy-wide response to a weaker real exchange rate.