GDP drops at a milder pace in the fourth quarter

A second national accounts release showed GDP fell at a more moderate pace of 0.8% on a seasonally adjusted quarter-on-quarter basis in the fourth quarter, above the 1.1% contraction tallied in the third quarter. Despite the improvement, Q4’s result came in below the preliminary estimate of a milder 0.4% GDP decline, and meant the economy entered a technical recession. On an annual basis, GDP contracted 1.8% in Q4, mirroring the previous period's decline. Q4's reading was a deterioration from the preliminary estimate. As a consequence, the economy contracted 1.0% overall in 2023 (2022: +1.3%), the worst result since 2012, barring 2020’s pandemic-induced downturn.

The softer quarterly decline reflected household spending flatlining in seasonally adjusted quarter-on-quarter terms in the fourth quarter (Q3: -0.6% s.a. qoq), following two periods of contractions. Moreover, government consumption rebounded, growing 0.8% in Q4 (Q3: -2.9% s.a. qoq). Less positively, fixed investment fell at a steeper rate of 1.5% in Q4, from the 0.9% contraction recorded in the previous quarter. Moving to the external sector, exports of goods and services fell 1.0% on a seasonally adjusted quarterly basis in the fourth quarter, which was milder than the third quarter's 2.8% contraction. Meanwhile, imports of goods and services fell at a softer pace of 1.5% in Q4 (Q3: -3.6% s.a. qoq).

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