GDP growth softens in the third quarter

GDP reading: According to a preliminary estimate, economic growth slowed to 3.1% year on year in the third quarter from 4.0% in the second quarter. The reading was slightly below market expectations.

Drivers: The statistical office did not provide a comprehensive breakdown, but monthly data suggests that private consumption dragged on the reading: Retail sales growth slowed in Q3 compared with Q2. The external sector was likely another culprit behind the deceleration, as the merchandise trade deficit widened in Q3 from Q2. A detailed breakdown is scheduled to be published on 2 December.

Panelist insight: Mate Jelic, analyst at Erste Bank, said: “Consumption is expected to remain the main driver of GDP growth over our forecast horizon. Investment activity also looks promising, as suggest by strong FDI inflow, and should continue in a similar fashion after the recent credit rating upgrade to investment grade.”

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