| Consensus | Consensus Range | Actual | Previous | |
| Quarter over Quarter | 0.2% | 0.2% to 0.2% | 0.2% | 0.5% |
| Year over Year | 1.1% | 1.1% to 1.1% | 1.2% | 0.9% |
Highlights
The economy expanded 0.2 percent in the fourth quarter, confirming the flash estimate and in-line with the median of an Econoday survey of economists' forecasts. Compared to the fourth quarter of last year, the economy expanded by 1.2 percent.
The result marks a slowdown from the third quarter when the economy expanded 0.5 percent. For the year as a whole, economic growth was 0.9 percent, lower than the 1.1 percent recorded for 2025.
Net foreign trade was a net contributor to growth by 0.7 percent in the fourth quarter, as imports fell 1.1 percent, and exports rose 1.0 percent. The import results are more likely to be underlying lack of demand than a positive development. At the same time, inventory changes subtracted 0.8 percent from the overall result.
Household spending rose 0.4 percent during the fourth quarter, the fastest rate since the 0.9 percent recorded during the third quarter of 2024. This is an encouraging result as consumers have been reluctant to spend over the past year due to myriad uncertainties, including domestic politics and US tariffs.
Still, household disposable income was flat during the fourth quarter, and has eroded steadily since rising 0.4 percent in the first quarter. Overall purchasing power among consumers was 0.2 percent lower that it was in the third quarter.
The economy continues to struggle in the face of weak demand, and it remains to be seen whether the bump in household spending continues in the first quarter, although monthly indicators show continued challenges for domestic demand.
Market Consensus Before Announcement
GDP growth expected unrevised from 0.2 percent on quarter and 1.1 percent on year in Q4.
Definition
Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. Following the release of the flash estimate about four weeks earlier, the second report incorporates additional data to provide a more accurate reading. This is also revised in the final report, published in the third month after the reference quarter.
Description
GDP is the all-inclusive measure of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Stock market Investors like to see healthy economic growth because robust business activity translates to higher corporate profits. The GDP report contains information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. These data, which follow the international classification system (SNA93), are readily comparable to other industrialized countries. GDP components such as consumer spending, business and residential investment illuminate the economy's undercurrents, which can translate to investment opportunities and guidance in managing a portfolio.
Each financial market reacts differently to GDP data because of their focus. For example, equity market participants cheer healthy economic growth because it improves the corporate profit outlook while weak growth generally means anemic earnings. Equities generally drop on disappointing growth and climb on good growth prospects.
Bond or fixed income markets are contrarians. They prefer weak growth so that there is less of a chance of higher central bank interest rates and inflation. When GDP growth is poor or negative it indicates anemic or negative economic activity. Bond prices will rise and interest rates will fall. When growth is positive and good, interest rates will be higher and bond prices lower. Currency traders prefer healthy growth and higher interest rates. Both lead to increased demand for a local currency. However, inflationary pressures put pressure on a currency regardless of growth.