GDP growth slowed to +3.4% y/y in Q4 2017 (from +3.7% y/y in Q3). Private consumption expanded by +6.3% y/y. Investment rebounded to an increase of +4.7% y/y in Q4 from a -1.3% y/y decline in Q3, largely thanks to stronger capital expenditures for machinery, equipment and intellectual products (+10.1% y/y). Export expansion remained robust (+3.4 % y/y for goods exports; +4% for services exports) driven by strong foreign demand for services. Looking ahead, we expect the economy to lose some momentum but to remain robust (+2.8% growth in 2018). Slower growth will be a result of weaker demand growth from China, tighter financing conditions, and property tightening measures. Yet, we expect domestic demand to remain relatively robust, supported by favorable fiscal policy. The budget proposals for FY2018-19 include tax relief for fragile agents and measures (for examples tax cuts) to support innovative corporates.
