The expenditure side of GDP was dominated by household consumption, which rose by 4.4% YoY following an increase of 2.5% YoY in 1Q25. The strength of consumer spending had already been signalled by quarterly retail sales data, and consumer demand was supported by calendar effects, among other factors. In 2025, the majority of the Easter spending took place in April, compared with March in 2024, which boosted the annual growth rate of consumption. Fixed investment disappointed, posting a 1.0% YoY decline after rising by 6.3% YoY in the previous quarter, even though we saw some encouraging signs in investment outlays of large enterprises in 2Q25. In 1Q25, investment growth was mostly propelled by the public sector as a result of rising defence investment. The change in inventories contributed 1.0 percentage point to annual GDP growth (1.5 percentage points in 1Q25) and domestic demand expanded by 4.0% YoY vs. 4.6% YoY in the previous quarter.
The deterioration in the foreign trade balance translated into a negative contribution from net exports, which knocked 0.4 percentage points off annual GDP growth in 2Q25 i.e. less than 1.1 percentage points in 1Q25. Exports of goods and services advanced by 1.5% YoY and imports by 2.6% YoY compared to 1.1% YoY and 3.5% YoY, respectively, in 1Q25. The slower growth of imports in an environment of buoyant consumption indicated less robust defence investment via imported military equipment.