Latest official data were encouraging. USD-denominated exports rose by +44.5% y/y in February. Looking at January-February figures in order to reduce the seasonal effect of the Chinese New Year, the momentum is still strong at +24.4% y/y. Industrial production accelerated to +7.2% y/y in Jan-Feb (from +6.2% y/y in December). On the expenditures side, nominal retail sales remained solid (+9.7% y/y in Jan-Feb), investment edged up (+7.9% y/y in Jan-Feb, compared to +7.2% in 2017). On prices, producer prices continued to rise but at a slower pace (+3.7% y/y in February, after +4.3 in January), yet consumer price inflation increased to +2.9% from +1.5%. Going forward, we expect this momentum to be temporary. First, rising protectionist measures from the U.S. will likely hamper export growth this year. Second, tighter credit conditions are set to act as a drag on further improvement of investment. Third, rising inflation may limit private consumption growth. Against this background we expect economic growth to slow to +6.5% in 2018 (from +6.9% in 2017).
