GDP records best reading since Q3 2022 in Q1 2024

A second release confirmed that GDP grew 1.1% year on year in Q1 2024, above the flat reading seen in Q4 2023. Q1's reading marked the best result in over a year. On a seasonally adjusted quarter-on-quarter basis, GDP rose 0.8% in Q1, having been flat in the previous quarter.

Private consumption strengthened, growing 3.6% year on year in the first quarter, which marked the best reading since Q3 2022 (Q4 2023: +0.3% yoy). Government spending, meanwhile, slid at a milder pace of 2.7% in Q1 (Q4 2023: -5.1% yoy). Less positively, fixed investment declined at a quicker rate of 6.9% in Q1 from the 2.8% decrease recorded in the prior quarter. On the external front, exports of goods and services fell 5.3% on an annual basis in the first quarter, which was a deterioration from the fourth quarter's 4.1% contraction. Meanwhile, imports of goods and services dropped at a quicker rate of 9.2% in Q1 (Q4 2023: -8.4% yoy).

GDP growth is expected to pick up from Q1 in the remainder of 2024. A declining unemployment rate and the ongoing monetary policy easing cycle should support private spending. Recoveries in exports, public spending and fixed investment should add further impetus. Stronger-than-expected demand from the broader EU is an upside risk.

ING analysts Peter Virovacz and Dávid Szonyi commented on the outlook: “Overall, we anticipate a slightly changing growth structure in the coming quarters, where domestic demand, and especially consumption, will become more prominent, while the contribution of net exports may decline compared to the current level. If, however, the improving external economic conditions in the second half of the year can provide a positive impulse for the industrial sector, we see an opportunity for a positive surprise through a resurgence in net exports. For the time being, we maintain our previous forecast of a 2.2% GDP growth for the current year, with significant upside risks.”

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