• Net export was revised up
• Inventories was revised down
• Government consumption was revised down
GDP in Q1 revised down to 2.4 from 2.5 percent, slightly weaker than expected
In the first quarter, GDP rose by 2.4 percent in annualised q-o-q terms, versus 2.5 percent in the advanced estimate. Consensus expected no revisions of the GDP growth.
Major revisions
Investment in non-residential structures was revised down to a decrease of 3.5 percent from a decrease of 0.3 percent, while investment in equipment and software was revised up to 4.6 percent from 3.0 percent. Note that growth in total non-residential investment was almost unchanged. Government consumption was revised down to a decrease of 4.9 percent from a decrease of 4.1 percent. Inventory investment added 0.6 percentage points to GDP growth after the revision from 1.0 percent. Net exports cut 0.2 percentage points of GDP growth after the revision from -0.5 percent.
GDP to grow by 2.5-3.0 percent this year, no soft spot in sight
We expect GDP to continue to grow by 2.5-3.0 percent in annualised q-o-q terms for the rest of the year. We are not concerned by the worse-than-expected incoming data in recent time (Citi economic surprise index). A sharp recovery of the housing market, stronger exports and an expansive monetary policy will continue to support the economy and help weather headwinds from an expected fiscal tightening.
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