GDP growth accelerates in the first quarter

The economy started the year on a stronger footing, with GDP expanding 3.3% year on year in the first quarter (Q4 2023: +2.0% yoy).

Domestically, the upturn was largely underpinned by faster household spending growth, which clocked a two-and-a-half-year high of 6.4% in the first quarter (Q4 2023: +4.7% yoy). Lower inflation in Q1 compared to the prior quarter, paired with a robust increase in remittance inflows, supported household budgets at the outset of 2024, in turn aiding private spending. Additionally, public spending slid at a milder rate of 1.7% in Q1 (Q4 2023: -9.5% yoy). Less positively, fixed investment growth moderated to 2.5% in Q1, following 6.2% recorded in the prior quarter. On the external front, exports of goods and services declined at a slower pace of 3.2% in Q1 (Q4 2023: -5.3% s.a. qoq). Meanwhile, imports of goods and services growth sped up to 13.2% in Q1 (Q4 2023: +11.3% yoy), marking the best performance in over two years.

Our panelists expect economic growth to have slowed mildly in the second quarter but forecast an overall robust expansion for 2024, chiefly underpinned by a rebound in exports of goods and services. Meanwhile, domestic demand is set to lose some steam compared to 2023 levels, driving GDP growth slightly below last year’s 3.5% and the prior-decade average of 3.6%.

Analysts at the EIU commented: “We expect inflows of remittances to remain strong over the remainder of 2024, underpinning our forecast for economic growth of 3.4% this year. The main risk to this forecast stems from weaker than expected growth in the US in the second half of the year.”

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