GDP falls at softest pace in over two years in Q2

GDP reading: GDP dropped at a slower rate of 1.0% year on year in the second quarter, above the 2.2% contraction tallied in the first quarter and marking the smallest fall since Q3 2022. On a seasonally adjusted quarter-on-quarter basis, GDP flatlined in Q2, compared to the previous quarter's 0.3% fall and marking the best reading since Q4 2021.

Drivers: On the domestic front, government consumption improved to a 1.1% expansion in Q2 (Q1: +0.6% yoy). Additionally, fixed investment rebounded, growing 7.9% in Q2, following the 9.6% contraction recorded in the prior quarter. Less positively, household spending shrank at a steeper pace of 1.3% year-on-year in Q2 from a 1.0% fall in Q1. Externally, exports of goods and services slid at a slower pace of 1.6% year on year in Q2, which marked the best reading since Q3 2022 (Q1: -7.6% yoy). In addition, imports of goods and services contracted at a milder pace of 0.3% in Q2 (Q1: -4.1% yoy), marking the best reading since Q4 2022. As a consequence, net exports remained positive for the third consecutive quarter.

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