SI: GDP down by 0.7% y/y in 1Q25
1Q25 GDP declined by 0.7% y/y, thus landing below our expectations (EBCe 2% y/y) and showing first negative performance since 4Q20. Seasonally adjusted data indicates that the economy contracted by 0.8% q/q, translating also to 0.8% decline on the annual level. Looking at the detailed structure, we saw somewhat expected development on the domestic demand side, private consumption held up with 0.4% y/y increase, albeit delivering less supportive footprint than anticipated and suggested by the high-frequency data. Investments activity, on the other hand, failed to deliver signs of rebound as figure remained in the negative with 5.1% y/y decline. Public consumption growth remained in check (2.6% y/y), while inventories had positive impact by adding 1.1pp to the headline figure. Negative external trade contribution was strong drag on the overall performance, where exports showed marginal increase vs more vivid imports footprint (0.1% y/y and 1.9% y/y, respectively), thus resulting in net exports shaving off 1.4pp from the headline figure in 1Q25.
Looking further into this year, we continue to see domestic demand remaining key growth engine, with private consumption maintaining steady growth momentum, coupled with the anticipated improvement of the investment profile. Opposed to that, challenges regarding the external demand developments should continue to weigh on the export outlook, thus keeping the net exports contribution toned down in period ahead. Disappointing 1Q25 output suggest downward revision of our current FY25 growth forecast, which stands at 2% mark, with risks remaining present and linked to external demand uncertainties.