• Real GDP grew 5.12% YoY in Q2 2025 and 4.04% QoQ, marking the strongest Q2 sequential rebound of recent years. The pattern is partly seasonal, Q2 typically jumps after a soft Q1, but 2025’s QoQ spike exceeded the ~3.7–3.8% norms, so the surprise reflects a cyclical upswing rather than a structural improvement.
• Several indicators contradicted the upbeat print: the manufacturing PMI contracted in each month of Q2; reports cited layoffs in labor-intensive industries and consumer sentiment softened. This fueled debate on whether growth was being misread or overstated. Authorities denied manipulation, arguing the data are sound but often misinterpreted relative to real-sector signals.
• Growth was investment-led, while household consumption, though supported by holidays and mobility, remained modest at ~4.97% YoY (2.6 p.p.). Gross fixed capital formation rose 6.99% YoY, adding ~1.9 p.p., bolstered by higher public capex and capital goods imports. Government consumption contracted, subtracting slightly, while net exports made a small positive contribution as non-oil exports and tourism improved.
• The main engines were capital-intensive: manufacturing (+5.68% YoY, led by basic metals and chemicals), information & communication (+8.5%), and construction (~5%). In contrast, labor-intensive areas, agriculture, low-end manufacturing, small retail, were subdued. This mix lifts GDP but limits broad wage and employment growth, explaining why many households still experience weak purchasing power.
• The paper argues the core issue is how GDP is interpreted: stronger, investment-driven growth does not automatically translate into improved welfare. Q2’s upside is cyclical and concentrated in capital-heavy sectors; without stronger household income growth, headline GDP will outpace lived experience. Policymaking should emphasize inclusive, labor-absorbing drivers, not just the aggregate.