Household consumption growth normalised in the second quarter, while consumer confidence rebounded to just above its long-term average in the third quarter. Retail-related indicators show little change from their second-quarter levels and remain near their long-run average. Fundamentals are still subdued but have improved slightly. All in all, we expect household consumption growth to stay broadly constant in the third quarter of 2025.
Business investment growth decelerated in the second quarter of 2025, in line with expectations. Managers' demand expectations have improved this quarter and uncertainty has decreased, pointing to a brightening of investment conditions. Nevertheless, fundamentals such as capacity utilisation remain rather weak. Overall, business investment growth should remain moderate in the third quarter but could edge up somewhat. Housing investment growth is expected to remain negative.
General government consumption growth should ease slightly, while public investment is set to expand at a moderate pace in the third quarter of 2025.
Net exports made a slightly negative contribution to GDP growth in the second quarter of 2025, as exports fell somewhat more than imports. With uncertainty easing, export growth is expected to strengthen in the third quarter. Domestic demand should continue to prove resilient, which is likely to lead to some recovery in imports. Overall, the contribution of net exports to GDP growth is likely to remain roughly neutral.