GDP growth moderates in Q1

Economic momentum lost in Q1: Annual GDP growth lost momentum in the first quarter of this year, easing to 3.9% from Q4 2024’s 4.5% reading.

Domestic demand and exports lose steam: On the domestic front, household spending growth moderated to 4.0% in Q1 from a 6.2% expansion in Q4. Government consumption growth also cooled, to 5.9% (Q4 2024: +8.9% yoy). That said, fixed investment growth accelerated to 10.6%, following the 7.3% expansion logged in the prior quarter. On the external front, exports of goods and services growth fell to 3.1%, marking the worst result since Q1 2024 (Q4 2024: +5.1% yoy). Meanwhile, imports of goods and services growth slowed to 7.1% (Q4 2024: +10.9% yoy).

GDP growth to broadly stabilize in 2025 as a whole: Annual GDP growth is seen averaging below Q1’s level through year-end. That said, full-year growth is set to remain close to 2024 levels. Private consumption growth is seen slowing as U.S. trade and immigration policies will likely weigh on exports and remittances. Even so, exports growth is still projected to strengthen, and government spending is set to more than quadruple as the government seeks to prepare the economy for returning nationals as a result of the U.S. crackdown. Finally, fixed investment growth is seen ticking up from 2024 levels on lower interest rates.

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