The economy was a little stronger than expected at the end of 2023. Real GDP expanded 0.3 percent on the quarter, matching both the market consensus and the unrevised previous period's rate. Annual growth accelerated from an upwardly revised 0.4 percent to 0.6 percent, its best reading since the first quarter of last year.

Quarterly growth was led by private consumption which also grew 0.3 percent after a 0.1 percent gain in July-September. Government consumption was up fully 0.6 percent after a 0.4 percent rise, but investment was weak. Hence, spending on equipment and software declined a further 2.5 percent, its third consecutive decrease, while construction investment was off 0.3 percent. As a result, final domestic demand contracted 0.3 percent.

Exports of goods advanced 0.5 percent and of services 1.7 percent while their import counterparts rose 1.6 percent and fell 0.6 percent respectively.

Outside of a 0.2 percent dip in the second quarter, GDP had a respectable 2023. However, the ongoing decline in investment is not good news for the medium-term outlook and will be a concern for policymakers. In sum, while not adding much to pressure on the SNB to cut interest rates next month, today's data at least leave open the door to possible easing. Despite slightly stronger than expected growth, the fourth quarter update puts the Swiss RPI at minus 29 and the RPI-P at minus 10 meaning that overall economic activity is falling slightly short of forecasts.

Quarterly growth is forecast at 0.2 percent, putting the annual rate at 0.4 percent, up a tick from last time.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. There is no flash estimate and the first report is typically not issued until around sixty days after the end of the reference quarter. This has the advantage of limiting the size of any future revision and also accommodates the inclusion of the GDP expenditure components.

GDP is the all-inclusive measure of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Investors in the stock market like to see healthy economic growth because robust business activity translates to higher corporate profits. Bond investors are more highly sensitive to inflation and robust economic activity could potentially pave the road to inflation. By tracking economic data such as GDP, investors will know what the economic backdrop is for these markets and their portfolios.

The GDP report contains a treasure-trove of information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. GDP components such as consumer spending, business and residential investment, and price (inflation) indexes illuminate the economy's undercurrents, which can translate to investment opportunities and guidance in managing a portfolio.