- GDP growth had a strong showing at 5.11% YoY in Q1-24, as Elections-related spending boosted consumption especially for low-income households. Discretionary spending by the upper- and middle-classes remains anemic, however.
- As Q1 growth benefited from one-off Election effect and the base effect from shifting Islamic calendar, it is quite likely that growth would slow towards 4.9 – 5.0% for the remainder of the year.
- Potential tailwinds come from post-Elections rebound in fixed-asset investment (FAI) and a recovery of commodity prices. However, the composition of the FAI (tilted towards buildings and capital-intensive sectors) may limit the multiplier effect of these investments.
- Although we foresee a slowdown in real GDP growth, we believe that nominal GDP might be buoyed by higher commodity prices. This should replenish domestic liquidity and eventually set the stage for a recovery in real GDP growth in 2025.
