January 26, 2016

In the fourth quarter of 2015, GDP expanded 3.0% over the same period last year. The expansion was stronger than both the 2.7% increase registered in the third quarter and the 2.5% rise that the markets had expected. However, the result tallied in the final quarter brings growth for 2015 as a whole to 2.6%, which is the weakest result in three years. Growth in Q4 was sustained by strong domestic demand and, while exports improved, the overall contribution from the external sector became more negative as imports accelerated. Improvements in the domestic economy throughout the year were consistently dragged down by a weak external sector.



On the domestic side of the economy, private consumption expanded 3.2% in Q4, which was up from the 2.1% increase tallied in Q3 and marked the strongest reading in more than four years. Fixed investment was broadly stable at a 5.2% expansion in Q4 (Q3: +5.1% year-on-year). Government consumption accelerated from a 3.0% increase in Q3 to a two-year-high expansion of 3.9% in Q4.



On the external front, exports of goods and services improved from a meager 0.3% increase Q3 to a 1.9% expansion in Q4, which marked the strongest result in five quarters. However, imports accelerated from a 3.3% expansion in Q3 to a 5.5% rise in Q4. As a result, the external sector’s net contribution to overall economic growth deteriorated further from minus 1.4 percentage points in Q3 to minus 1.6 percentage points in Q4.



A quarter-on-quarter comparison showed that GDP increased a seasonally-adjusted 0.6% in Q4, which was less than half the 1.3% increase tallied in Q3.

The Central Bank expects GDP to increase 3.0% in 2016 and 3.2% in 2017. FocusEconomics Consensus Forecast panelists foresee the economy growing 2.8% in 2016, which is unchanged from last month’s estimate. For 2017, the panel projects that the economy will expand 3.0%.