The latest GDP growth rate YoY for PS, released on September 29, 2025, registered at 4.70%, a notable slowdown from August’s 9.10% but significantly above the -2.00% forecast. This reading, sourced from the Sigmanomics database, reflects a moderation after a period of rapid expansion. Historically, PS’s GDP growth has averaged around 3.50% over the past five years, making this recent print above trend despite the deceleration.

Drivers this month

• Reduced consumer spending growth, contributing -1.20 percentage points (pp) to the slowdown.
• Weaker export demand amid geopolitical tensions, subtracting 0.80 pp.
• Continued strength in the services sector, adding 1.50 pp.
• Government infrastructure projects supporting 0.70 pp.

Policy pulse

The current growth rate sits below the central bank’s target range of 5–7%, reflecting the impact of recent monetary tightening. The central bank has raised policy rates by 125 basis points since Q1 2025 to contain inflationary pressures, which has dampened credit growth and investment.

Market lens

Immediate reaction: The PS currency depreciated 0.40% against the USD within the first hour post-release, while 2-year government bond yields rose 15 basis points, signaling market concern over growth moderation.

Core macroeconomic indicators provide context for the GDP reading. Inflation in PS remains elevated at 5.30% YoY, down slightly from 5.70% last month, pressured by higher energy costs and supply chain disruptions. Unemployment held steady at 6.10%, near its five-year low, supporting consumer demand despite tighter financial conditions.

Monetary Policy & Financial Conditions

The central bank’s cumulative rate hikes have increased borrowing costs, with the benchmark rate now at 4.50%. Credit growth slowed to 3.20% YoY from 5.00% three months ago. The yield curve flattened, reflecting market expectations of slower growth ahead.

Fiscal Policy & Government Budget

Fiscal consolidation efforts continue, with the government reducing its budget deficit to 3.80% of GDP from 4.50% last year. Spending on infrastructure and social programs remains robust but is balanced by higher tax revenues from improved compliance and economic activity.

External Shocks & Geopolitical Risks

Heightened geopolitical tensions in the region have disrupted trade flows, particularly affecting exports to key partners. Commodity price volatility and sanctions on select trading partners have added uncertainty to the external environment.

Chart Insight

Market lens

Immediate reaction: PS government bond yields rose sharply, with the 10-year yield increasing 20 basis points, while the PS currency weakened against major peers. Equity markets showed mixed responses, with cyclical sectors underperforming.

Looking ahead, three scenarios frame the growth outlook for PS:

• Bullish (30% probability): Geopolitical tensions ease, boosting exports and investment. Monetary policy pauses, supporting credit growth. GDP growth rebounds to 6.50% by Q1 2026.
• Base (50% probability): Moderate growth continues at 3.50–4.50%, with inflation gradually declining and fiscal policy maintaining support. External risks persist but are manageable.
• Bearish (20% probability): Prolonged geopolitical conflicts and tighter global financial conditions trigger a sharper slowdown, pushing growth below 2% and increasing unemployment.

Structural & Long-Run Trends

PS faces structural challenges including labor market rigidities, productivity gaps, and reliance on volatile commodity exports. However, ongoing reforms in technology adoption and infrastructure investment offer long-term growth potential.

Policy pulse

Monetary authorities are expected to maintain a cautious stance, balancing inflation control with growth support. Fiscal policy may tilt toward targeted stimulus if downside risks materialize.

The September 2025 GDP growth rate YoY for PS at 4.70% signals a clear moderation from the prior month’s surge. While the economy remains resilient, external shocks and tighter financial conditions are weighing on momentum. Policymakers face a delicate balancing act to sustain growth without fueling inflation. Market participants should prepare for volatility as new data unfolds and geopolitical risks evolve. Structural reforms remain critical to unlocking PS’s long-term potential.

Key Markets Likely to React to GDP Growth Rate YoY

The GDP growth rate is a key barometer for PS’s economic health, influencing multiple asset classes. The following markets historically track this indicator closely:

• PSCO – A leading PS stock index reflecting domestic economic activity.
• USDPSE – The USD to PS currency pair, sensitive to growth and monetary policy shifts.
• PSBTC – A crypto asset linked to PS’s digital economy initiatives.
• PSIN – Industrial sector ETF, closely tied to export and manufacturing output.
• EURPSE – Euro to PS currency, reflecting trade and capital flows with Europe.

FAQs

What does the latest PS GDP Growth Rate YoY indicate?

The 4.70% growth rate indicates a slowdown from August but remains above trend, signaling moderated but positive economic expansion.

How does this GDP reading affect PS monetary policy?

It supports a cautious monetary stance, balancing inflation control with growth support amid external uncertainties.

What are the main risks to PS’s growth outlook?

Geopolitical tensions, tighter global financial conditions, and structural economic challenges pose downside risks.

Key takeaway: PS’s economy is transitioning from rapid recovery to moderate growth, with policy and external factors shaping the near-term trajectory.