GDP grows at softest pace since late 2022 in Q1

GDP growth softens in Q1: Activity growth softened markedly in Q1, with GDP expanding 2.0% year on year (Q4 2024: +3.3 yoy)— the weakest result since Q4 2022. On a seasonally adjusted quarter-on-quarter basis, economic activity declined 0.6% in Q1, contrasting Q4's 1.1% expansion and marking the sharpest decrease since Q3 2022.

Downturn driven by moderating domestic and external sectors: The slowdown in annual GDP growth was driven by a softer rise in private consumption and exports, plus a decline in fixed investment. On the domestic front, private consumption growth eased to 1.7% in Q1 (Q4 2024: +3.8% yoy), while fixed investment contracted 1.0% in Q1 (Q4 2024: +1.1% yoy), marking the worst reading since Q4 2020. More positively, public spending rebounded, growing 0.5% in Q1 (Q4 2024: -0.3% yoy). On the external front, exports of goods and services growth waned to 7.5% (Q4 2024: +8.1% yoy), whereas imports of goods and services growth sped up to 11.5% in Q1 (Q4 2024: +7.1% yoy).

Annual GDP growth to cool on broad-based slowdown: Our panelists see annual GDP growth accelerating from current levels over 2025, though overall annual growth will likely fall below 2024 levels. The full-year slowdown will be broad-based, with softer growth in both domestic demand and exports. Heightened domestic political instability and rising international trade tensions pose downside risks.

Panelist insight: EIU analysts commented: “We have revised down our real GDP growth forecast for 2025 […] to take account of the negative impact of persistent domestic political instability and international economic uncertainty arising from rising protectionism. These will combine to dent private consumption and investment growth.”

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