Second estimates by the Central Statistical Office confirmed that Q4 real GDP rose by +1% q/q (+1.2% in Q3) and +5.1% y/y (+4.9% in Q3), taking full-year 2017 growth to +4.6% (which was up from +2.9% in 2015). Growth in Q4 was driven by domestic demand, with consumer spending up by +4.9% y/y, government spending by +5.4% y/y, and fixed investment accelerating to +11.3% y/y (bringing the full-year increase to +5.2%, a solid rebound from -7.9% in 2016) thanks to much improved utilization of EU funding for eligible projects. Meanwhile, inventories subtracted -0.4pp and net exports -0.8pp from Q4 growth. The latter was a result of real imports expanding faster (+9.2% y/y) than exports (+6.8% y/y). Early indicators suggest continued momentum in Q1 2018. In January, non-seasonally adjusted industrial production rose by +8.6% y/y, construction output by +34.6% y/y and real retail sales by +7.7% y/y, indicating continued strong domestic consumption at the start of the year. In 2018 as a whole, investment growth should remain strong but slow down somewhat due to base effects. Euler Hermes expects annual GDP growth to moderate slightly to +4% in 2018.
