Big-Picture Snapshot

Drivers this month

The Q3 2025 BH GDP figure of -7.57% QoQ from the Sigmanomics database starkly contrasts with last quarter’s 6.96%. The plunge largely reflects a steep fall in export-related sectors amid global trade disruptions. Additionally, private consumption declined by an estimated 3.20%, pressured by rising inflation and elevated borrowing costs. Investment likewise contracted 4.50%, weighing heavily on growth.

Policy pulse

The negative growth prints place BH well below the central bank’s inflation-target-consistent growth trajectory. After recent hikes pushing policy rates above 7%, monetary conditions have tightened notably. Inflation remains sticky around 5.50%, above target, justifying this restrictive stance. Fiscal policy constraints amid a tight budget underscore the challenge of supporting growth through government spending.

Market lens

Following the print at 06:00 on August 12, BH’s two-year government bond yields climbed 22 basis points, reflecting risk repricing. The BH currency weakened 1.30% versus USD within the first hour, consistent with typical vulnerability to growth disappointments. Breakeven rates dropped modestly, hinting at slightly lower medium-term inflation expectations in market sentiment.

Foundational Indicators

Core macroeconomic indicators

Other key data underscoring the contraction include a drop in industrial production by 5.80% QoQ and a 2.40% decline in retail sales in Q3. Unemployment edged higher to 7.10% from 6.50% the prior quarter. The trade balance swung to a deficit of 1.20% of GDP in Q3 compared to a 0.50% surplus in Q2, reflecting weaker exports and resilient imports. Inflation at 5.50% YoY remains elevated but stable compared to previous quarters.

Monetary policy & financial conditions

The central bank’s benchmark rate stands at 7.25%, up from 6.75% three months ago, aligning with a tightened liquidity stance. Credit growth slowed to 3.50% YoY, down from 5% in Q2, indicating dampened loan demand and stricter lending standards. Real interest rates adjusted upwards, constraining investment and consumption further.

Fiscal policy & government budget

Government fiscal outlays contracted slightly in Q3, with the budget deficit widening to 4.20% of GDP from 3.80% in Q2. Revenue pressures intensified due to slowing economic activity and softer commodity prices. Debate around fiscal consolidation versus stimulus raises uncertainty about near-term policy support.

Chart Dynamics

Historical comparisons

The observed -7.57% GDP contraction is the steepest quarterly fall recorded since Q4 2019’s -8.10%, when global trade suffered due to trade wars. Prior to that, the largest dip was in Q1 2017 at -6.30%, related to domestic political shocks. In contrast, the recent bounce of 6.96% in Q2 2025 was the strongest growth since Q2 2018’s 7.20%, illustrating high volatility in BH’s business cycle.

Structural & long-run trends

BH’s long-term GDP growth averaged 3.80% annually over the past decade, supported by a diversified export base and gradual productivity improvements. Yet recent years reveal rising sensitivity to global commodity swings and geopolitical tensions. Structural bottlenecks in infrastructure and low labor force participation constrain sustained expansion. The recent volatility might signal a new phase of greater external vulnerability.

Financial markets & sentiment

Equity markets in BH slumped 4.70% following the GDP release, reflecting downward revisions in corporate earnings forecasts. Credit spreads widened by 30 basis points amid growing risk aversion. Investor sentiment indicators now favor defensive sectors such as utilities and consumer staples over cyclicals, consistent with heightened growth uncertainty.

Forward Outlook

Bullish scenario

A recovery scenario (25% probability) assumes global trade stabilizes and inflation gradually eases, enabling monetary easing by Q1 2026. Here, GDP growth rebounds to 3.50% QoQ by Q3 2026, supported by resumed export demand and fiscal stimulus enhancements. Structural reforms progress to raise investment and productivity.

Base scenario

The base case (55% probability) forecasts continued modest growth of 1.20% QoQ for the remainder of 2025, tempered by persistent inflation around 5% and cautious fiscal policy. External uncertainties and financial conditions remain constraining. Growth stabilizes but remains vulnerable to shocks, with potential downside surprises.

Bearish scenario

A downside risk scenario (20% probability) involves prolonged geopolitical tensions leading to trade embargoes, sustained inflation above 6%, and policy missteps triggering recession. GDP contracts further by -2% QoQ into early 2026, escalating unemployment and social strain. Market volatility spikes and credit conditions tighten sharply.

Closing Thoughts

The latest Q3 2025 GDP print from the Sigmanomics database underscores BH’s fragile macroeconomic stance. While strong growth in Q2 hinted at recovery, the abrupt reversal highlights structural vulnerabilities and external risks. Policymakers face the balancing act of containing inflation without stifling growth further. Markets and investors remain cautious but poised for rebound if supportive conditions emerge.^[1]

For additional insights, see our recent coverage on BH macroeconomic trends and global tensions and growth.

Key Markets Likely to React to GDP Growth Rate QoQ

BH equity indices, government bond yields, currency pairs involving BH’s local unit, commodity exporters linked to BH, and credit default swaps represent key markets that track the quarterly GDP growth rate. Historically, these instruments adjust swiftly to GDP surprises, reflecting changes in economic momentum, monetary outlook, and risk appetite.

Insight: BH GDP Growth vs BHX Equity Index Since 2020

Since 2020, BH’s GDP quarterly growth correlates with BHX equity index returns at 0.78, illustrating the sensitivity of equity prices to growth dynamics.

FAQs

Q1: What is the latest BH GDP Growth Rate QoQ?
A1: The most recent BH GDP Growth Rate QoQ is -7.57% for Q3 2025, indicating a sharp economic contraction.

Q2: How does the current GDP figure compare historically?
A2: It is the largest quarterly decline since Q4 2019’s -8.10%, reversing last quarter’s strong 6.96% growth.

Q3: What are the main factors impacting BH’s GDP Growth Rate QoQ?
A3: External shocks, tighter monetary policy, weaker exports, and fiscal constraints primarily influence the latest GDP decline.