GDP growth records best reading in nearly two years in the third quarter

Growth strengthens in Q3: A second release confirmed that GDP growth accelerated to 3.9% year on year in the third quarter from 3.7% in the second quarter, marking the best result since Q4 2022. On a working-day and seasonally adjusted quarter-on-quarter basis, economic growth improved to 1.1% in Q3, following the previous quarter's 0.1% growth.

Public consumption drives the improvement: Public spending spearheaded the acceleration with a 7.1% expansion in Q3 (Q2: +4.8% yoy). That said, private consumption growth fell to 3.9% in Q3 (Q2: +4.6% yoy), marking the weakest expansion since Q2 2023. Moreover, fixed investment shrank 6.4% in Q3, contrasting the 10.6% expansion logged in the prior quarter, due to sharp contractions in machinery and transport equipment. On the external front, exports of goods and services growth moderated to 4.2% in Q3 (Q2: +16.3% yoy). Meanwhile, imports of goods and services growth slowed to 0.9% in Q3 (Q2: +12.8% yoy), pushing up the headline reading.

GDP growth to cool ahead: Our panelists expect GDP growth to lose some steam in the last quarter of 2024 and expect growth to ease slightly from 2024 in 2025 as a whole due to slower expansions in exports plus private and public spending. Escalating conflict in Ukraine and the Middle East is a downside risk.

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