GDP growth hits three-year high in Q4

GDP rebounds in Q4: GDP bounced back in Q4, expanding 1.4% on a seasonally adjusted quarter-on-quarter basis (Q3: -0.9% qoq s.a.), marking the best result in three years and more than triple the EU average. On an annual basis, economic activity rose 1.8% in Q4, improving from the previous quarter’s flat reading and signifying the best reading since Q3 2022. As a result, the economy rebounded by 1.0% in 2024, following a 2.7% contraction logged in 2023.

Total investment and exports drive the rebound: Domestically, total investment fell sequentially at a milder pace of 0.8% in Q4 (Q3: -5.1% qoq s.a.), likely aided by lower interest rates. Government consumption growth was stable at Q3’s 0.8% in Q4. Meanwhile, household spending growth fell to 0.4% in Q4, marking the weakest expansion since Q1 2024 (Q3: +1.5% qoq s.a.). On the external front, exports of goods and services growth accelerated to 1.8% in the fourth quarter, posting the best reading since Q1 2023 (Q3: +0.1% s.a. qoq). In addition, imports of goods and services growth rose to 1.8% in Q4 (Q3: +0.6% s.a. qoq).

Economy to gain speed in 2025: Our Consensus is for GDP growth to pick up from 2024 levels in 2025: Looser financing conditions will fuel a rebound in fixed investment, buttress private consumption and bolster the crucial financial sector. Moreover, exports of goods and services are expected to grow at a faster pace amid stronger EU demand. On the flip side, softer public spending growth will keep GDP growth in 2025 below its 10-year pre-pandemic average. Escalating international trade frictions and higher-than-expected inflation are downside risks.

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