November 30, 2018
A comprehensive GDP release confirmed that annual growth lost some traction in the third quarter, coming in at 4.7% (previously reported: +4.8% year-on-year), down from 5.3% in the second quarter. Nevertheless, the seasonally-adjusted quarter-on-quarter print improved markedly in the third quarter (Q3: +1.7% quarter-on-quarter s.a.; Q2: +1.2% qoq s.a.), suggesting the underlying dynamics remained upbeat.
Domestic demand was the chief driver of the expansion in Q3, propped up by strong investment activity. Fixed investment growth remained elevated in the third quarter (Q3: +13.2% yoy; Q2: +13.5% yoy), amid a booming construction sector and surging investment in machinery and equipment as well as intellectual property products. In addition, private consumption growth accelerated from 4.3% yoy in Q2 to 4.7% in Q3, marking the best reading so far this year against the backdrop of tightening labor market conditions. Lastly, government consumption growth moderated to 3.5% on annual basis in Q3, from 3.7% in Q2.
On the external front, the third-quarter performance was significantly less upbeat. Exports rose a mere 1.0% in annual terms in the third quarter, down from 7.1% in the previous quarter, amid a wider slowdown in EU and global trade activity. Meanwhile, imports growth moderated to 3.4% in annual terms in Q3, below Q2’s 3.7%. As a result, the external sector subtracted 1.7 percentage points from third-quarter growth, compared to a 2.0 percentage-point contribution in the second quarter.
Author: Almanas Stanapedis, Economist