GDP: sluggish growth in the fourth quarter

According to the preliminary data, GDP rose at an unadjusted rate of 1.6% year-on-year, a disappointment relative to the expectations a quarter ago but not a real surprise, considering the recent monthly industrial and construction data. The seasonally and calendar adjusted volume of GDP was up 0.4% compared to the previous quarter. As a result, the unadjusted GDP growth by 2% in 2016 as a whole, the slowest annual pace since 2013, the beginning of the post-crisis recovery period.

On the production side, industrial value added stagnated or even declined in Q4 on an annual basis, which was compounded by the fact that the year-end moderation of the year-on-year fall in construction activity failed to materialize. On the expenditure side, private consumption growth probably lost momentum in the fourth quarter, instead of gaining speed. Considering the continuation of strong wage growth, a rebound of consumption can be expected in 2017, along with the recovery of fixed investments, which will drive the overall GDP growth well above 3%.