Real GDP growth slowed as much as was expected, from 7.3% yoy in Q4 2014 to 7% yoy in Q1. In qoq terms, after the government’s seasonal adjustments, the growth rate fell for the third quarter in a row, to 1.3% (5.3% annualised) from 1.5% (6.1% annualised). Not surprisingly, nominal growth decelerated more sharply, from 7.7% yoy to 5.8% yoy, implying a negative deflator of -1.1% yoy (vs 0.4% previously). These figures were nearly as weak as those published at the height of the global financial crisis in early 2009. The expenditure breakdown, or the lack of it, was another reason for concern. At the media briefing following the data release, the spokesperson offered only a directional description of the contribution by expenditures, without revealing exact numbers like before. From other activity data it was plainly evident that domestic demand was weak and net exports contributed more. “Our calculation shows the contribution of net exports (goods and services combined) was in the range of 2~3ppt, compared with -0.8~-0.5ppt in Q4 last year. This suggests domestic demand may have experienced a loss of speed to the north of 3ppt, teetering on the verge of a hard landing”, Said Societe Generale in a report on Thursday
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