GDP growth to be pulled down by domestic weakness

The pick-up in first-quarter GDP growth to 2.5% annualised, propelled by an energy-driven rebound in net exports, masks the undertow from the slowing domestic economy. Government spending restraint, waning business confidence and the nascent housing slowdown will all constrain domestic demand growth. With more balanced export growth ahead, we expect GDP growth to drop back to around 1% annualised.

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