GDP growth cools notably in Q4
GDP growth slowed to 1.4% year on year in the fourth quarter, from 4.6% in the third quarter. Q4’s reading marked the worst result in over a year and came in below market expectations.
The slowdown reflected deteriorations in private and public consumption, fixed investment and exports. Household spending growth decreased to 5.7% year on year in the fourth quarter (Q3: +9.1% yoy). A notable drop in spending on durable goods—notably purchases of vehicles—was mainly behind the decline. Meanwhile, fixed investment weakened, growing 3.8% in Q4, following the 5.5% expansion in the prior quarter, weighed down by a deceleration in private investment growth. Government spending, meanwhile, deteriorated, contracting 8.0% in Q4 (Q3: -1.5% yoy) largely due to lower medical spending for Covid-19-related expenditure.
On the external front, exports of goods and services dipped 0.7% in Q4 (Q3: +8.7% yoy), dragged down by reduced foreign sales of chemicals and petrochemical products as well as of vehicle parts and accessories and rubber. Moreover, imports of goods and services fell 4.6% in Q4 (Q3: +9.5% yoy) amid dwindling domestic demand.
On a seasonally adjusted quarter-on-quarter basis, the economy contracted 1.5% in Q4, compared to the previous quarter’s 1.1% expansion. Q3’s reading marked the worst result since Q2 2020.
Commenting on the economic outlook, Enrico Tanuwidjaja, economist at UOB, stated:
“Given the downside surprise, we revise our 2023 growth forecast lower to 3.1% as the strength of domestic economic recovery appears to be more modest than expected. Nevertheless, we continue to expect higher and steadier tourism income amidst China’s reopening to bode well for services exports performance.”
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