Economy unexpectedly loses momentum in Q3

Sequential growth wanes in Q3, misses expectations: GDP growth decelerated to 0.3% in seasonally adjusted quarter-on-quarter terms in the third quarter, according to a preliminary estimate. The result came in below the prior quarter’s 0.4% increase and both market and the Central Bank expectations. Conversely, on an annual basis, the economy gained further steam and expanded 1.3% in seasonally adjusted year-on-year terms in the three months to September, more than double the prior three months’ 0.6% rise; the result was the best in two years. That said, it still undershot market projections.

External demand continues to lag: A full breakdown is still pending, but the statistical office reported that the quarterly moderation was due to a stagnation in external demand. More positively, domestic demand grew, according to the statistical office, potentially driven by stronger private spending: Inflation fell in Q3, likely outpaced by wage growth—as it has been the case since Q1—and by the start of the quarter, the Central Bank had cut borrowing costs by 225 basis points since December 2023. Looking at sectoral data, the statistical office said that manufacturing and construction output supported growth. A full release will be published on 29 November.

Broad-based economic improvement ahead: Our panelists expect GDP growth in sequential terms to roughly double from Q3 in Q4 and accelerate further in Q1 2025, before stabilizing through Q4 2025. Purchasing power will be supported by receding inflation—which will be outpaced by wage growth—supporting private spending in turn. Additionally, the Central Bank’s loosening cycle will boost fixed investment once its impact trickles down to the real economy. Externally, exports should improve over the coming quarters following Q3’s stagnation.

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