After strong Q1 growth (+1.2% q/q), economic activity remained dynamic in Q2, posting +0.7% q/q. Q2 growth was driven by internal demand, while exports were a drag so that external demand subtracted -1.2pp q/q. On a y/y basis, investment contributed positively to growth for the third straight quarter (+1.6pp) after having subtracted on average -0.4pp from growth in 2014-2017. Especially investment in machinery and equipment grew strongly by +12.5% y/y. In all, this helped to achieve an impressive +5% y/y growth in Q2 after +5.1% in Q1, the highest rates since 2012. On the supply side, growth was broad-based with manufacturing activity as the main driver. In July, business confidence receded to its lowest level since last December while inflation accelerated to its fastest pace in more than a year (+2.7%). Along with the drop in copper prices (to their lowest level in a year) we thus see factors for slower growth in H2. We expect annual growth of close to +4% this year, up from +1.5% in 2017.
