GDP components: consumption picking up, service export flagging

160308_GDP2_ENThe final data confirmed that GDP grew by 3.2% in Q4 and 2.9% in 2015 as a whole. As for the components, domestic use grew by 3.2% – a remarkable acceleration compared to the less than 1.5% in the first three quarters. Among the domestic components, the unexpected upturn in consumption expenditures (to 3.5%) and households’ actual consumption (3.2%) was the most noteworthy development. Consumption expenditures expanded by 3.1% in 2015 as a whole, the highest annual rate since 2004, and a reflection of both the dynamic income growth and the ongoing shift in the attitude of households regarding consumption and saving.

External trade developments were surprising as well, but in a bad way: due to the sharp upturn in the import of services, along with the export of services suddenly losing momentum, the overall export rose at a slightly lesser pace than overall import in the last quarter. Even so, the growth contribution of net export was positive, but minimal, as opposed to the previous quarters of the year.

As a result, although net export seemed to be boun160308_GDP1_ENd to be the dominant driver of growth in 2015 after the release of the Q3 data in December, the evolution of the components in the fourth quarter upended this expectation: the annual growth contribution of domestic demand – particularly consumption – dominated that of net export, even if the latter was significant on a yearly average.

On the production side, agricultural value added declined again, although less steeply than in the first three quarters. Industrial value added grew only by 7.2%, an unpleasant surprise, which means that the gap between the respective growth rates of gross industrial production and industrial value added widened substantially in Q4.  Services value added, on the other hand, rose by 3%, well within the expected range. The growth in services was primarily driven by tourism and administrative and support service activities. For 2015 as a whole, the growth contribution of services minimally surpassed that of industry.