Not really Real GDP increased by +6.8% y/y in Q4 (the same pace as in Q3), taking full-year 2017 growth to +6.9%. However, the quarterly growth rate indicates a slowing momentum (+1.6% q/q in Q4 compared to +1.8% in Q3). Growth in Q4 was mainly driven by the tertiary sector (+8.3% y/y, up from +8% in Q3). Expansion in the secondary sector eased further to +5.7% y/y in Q4 (from +6% in Q3). High frequency indicators for December also point to slower impetus. Firstly, nominal retail sales growth moderated to +9.4% y/y (from +10.2% in November). Secondly, cumulative YTD urban investment growth remained at a low level of +7.2% y/y. Thirdly, real industrial production edged up slightly to +6.2% y/y in December from +6.1% in November, yet it is still low compared to previous rates (e.g. +6.6% y/y in September 2017). As expected, the authorities’ moves to improve growth quality (for example financial and property market tightening and cuts in overcapacity) have started to dent growth. Against this background, we maintain our forecast of a deceleration of GDP growth to +6.4% in 2018.
