06 Feb 2025 | News & Feature

GDP: What can we expect from this “baby bump”

  • GDP growth accelerated to 5.02% YoY in Q4-24, thanks to government spending amid Regional Elections and a manufacturing recovery aided by efforts to front-run Trump tariffs.
  • Consumption has been aided by “Elections effect” and mostly held up better than many feared. In contrast, investment slowed as the drive to expedite “legacy projects” faded.
  • As the government makes a hard pivot from infrastructure spending towards free meals and other programs, growth may slow in the interim due to reallocation of resources.
  • Rising inventories had been a very significant growth driver in 2024 amid a general oversupply of commodities and manufactured goods globally, further increasing the odds of a slowdown in 2025.
  • Unwinding of inventory growth would be negative for real GDP growth but positive for nominal growth, and the ensuing reflation could spur growth in the longer-run.