Economic growth remains robust in Q4

According to a preliminary reading, GDP growth was unchanged at Q3’s 0.6% increase on a seasonally adjusted quarter-on-quarter basis in the fourth quarter. Q4's reading marked the joint-best result since Q2 2022. On an annual seasonally adjusted basis, economic growth accelerated to 2.2% in Q4 from the previous quarter's 1.4% expansion.

Household spending growth ebbed to 0.2% seasonally adjusted quarter on quarter in Q4 from a 0.3% expansion in Q3. Government consumption accelerated to a 0.4% increase in Q4 (Q3: +0.2% s.a. qoq). Meanwhile, fixed investment contracted 1.4% in Q4, marking the worst result since Q1 2022 (Q3: +0.5% s.a. qoq). On the external front, exports of goods and services increased 2.6% on a seasonally adjusted quarterly basis in the fourth quarter, which was below the third quarter's 3.4% expansion. In addition, imports of goods and services growth waned to 1.0% in Q4 (Q3: +2.3% s.a. qoq).

Our panelists expect quarter-on-quarter GDP growth to remain broadly stable throughout the year, leading to a total yearly expansion roughly double that seen in 2023; activity will be supported by a recovery in world trade. Downside risks include a surge in oil and gas costs amid regional wars. The health of China’s economy is a key factor to watch.

Analysts at Nomura said: “Elevated financial stress and growing evidence of weakening domestic demand suggest the domestic economy will remain a drag on growth, limiting the positive growth momentum in the export sector. Thus, as we remain cautious on the sustainability of export-led growth, we expect growth to slow sharply to 1.4% y-o-y in H2 after solid growth of 2.5% in H1.”

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