“The NIS published the flash GDP data for 4Q23. Full year 2023 GDP growth came in at 2.0% y/y, decelerating from 4.1% y/y in 2022. The full-year reading is similar to Bloomberg consensus and in line with our forecast of 2.1% y/y. Surprisingly, the economy contracted in 4Q23 by 0.4% q/q vs +0.7% q/q Bloomberg survey median and +1.2% q/q our call, coming at odds with both hard and soft high frequency data. This has an important impact on 2024 GDP growth outlook due to negative carry over effect. Hence, we expect it to be revised up to positive territory. GDP growth accelerated in annual terms to 2.9% y/y in 4Q23, below our forecast of 4.9% y/y and above Bloomberg consensus of 2.2% y/y, from 1.1% y/y in the previous quarter. The GDP data series was subject to large historical revisions,” Erste said in its report.
“We revise down our full year 2024 GDP growth forecast at 2.6% from 3.3% previously in the light of recently released data. We see some upside risk to our call depending on the magnitude of the likely upcoming data revisions in 4Q23. The breakdown will be released on the 8th of March, and we expect the quarterly figure to be significantly revised to the upside by then. We expect consumption to show signs of recovery in 4Q23 and we see investments to continue to support growth in 4Q23. The consumption momentum is to be expected to keep on going into 2024 on the back of strong nominal wage growth, lower inflation, and better external demand prospects. We see investments supported by EU funds crucial for the economic growth this year,” the report also reads.