Seasonally adjusted real GDP growth decelerated to +0.5% q/q in Q2 from +1.2% in Q1. In unadjusted y/y terms, GDP growth slowed down to a still strong +4% in Q2 from +4.2% in Q1. Domestic demand eased somewhat but remained firm in Q2, with private consumption rising by +5.3% y/y (+6% in Q1), government consumption by +4.6% (+5.5% in Q1) and gross capital formation by +7.6% (+10.2% in Q1), including inventories which added +0.6pp to y/y growth. Exports of goods and services grew by +5.8% y/y (up from +4.3% in Q1) but was outpaced by imports which rose by +11.8% (+13.4% in Q1), reflecting the firm domestic demand, notably the build-up in inventories. Hence net exports subtracted -1.8pp from Q2 growth (-2.7pp in Q1). High consumer confidence and low unemployment should continue to support consumption in the near term while the build-up in inventories is likely to reverse. We forecast full-year GDP growth of +3.8% in 2018 and +3.6% in 2019.
