GDP (Q2)

The relatively disappointing 6.5% annualised gain in second-quarter GDP, which was well below the consensus at 8.5%, included unexpected declines in government spending and residential investment, and a bigger drag from inventories than we had anticipated. The good news is that the economy has now surpassed its pre-pandemic level. But with the impact from the fiscal stimulus waning, surging prices weakening purchasing power, the delta variant running amok in the south and the saving rate lower than we thought, we expect real GDP growth to slow to 3.5% annualised in the second half of this year.