Real GDP rose by +5.4% y/y in Q1 (after +5.9% in Q4 2017). Domestic demand growth slowed to +4.1% y/y (from +6.5% in Q4) due to a sharp deceleration in private investment (to +0.5% y/y from +9.3% in Q4) and weaker public spending (-0.1% y/y, after +3.4% in Q4). Private consumption remained strong (+6.9% y/y in Q1). Net exports supported economic growth thanks to a stronger increase in exports than imports. Yet it is worth noting that exports decelerated (to +3.7% y/y in Q1 from +9.4% in Q4). Looking ahead, we expect economic growth to continue to slow but remain resilient at +5% or so. Trade will likely remain supportive, yet we foresee a deceleration, mainly due to slower demand growth from China. Domestic demand should remain firm, supported by continued private consumption. First, wages, job creation and consumer confidence are still well oriented. Second, the removal of the GST (Goods and Services Tax) promised by the new political leadership would boost consumption. Investment growth is expected to slow somewhat as foreign investors wait to get more clarity on the new leadership’s strategy.
