Real GDP growth slowed down to +0.9% in q/q seasonally adjusted terms in Q2 (from +1.6% in Q1) but maintained a strong pace of +5.1% in y/y terms (only marginally down from +5.2% in Q2). The demand-side breakdown reveals that growth in Q2 was broad-based, in contrast to Q1 when it was entirely driven by domestic demand. Private consumption rose by +4.9% y/y and government consumption by +4.4% in Q2. Capital formation moderated in Q2, with fixed investment up by +4.5% y/y (+8.1% in Q1) and inven¬to¬ries contributing +0.2pp to y/y growth (+1.5pp in Q1). Meanwhile, external trade activity rebounded in Q2, with exports up +6.9% y/y (+1.1% in Q1) and imports up by +6.5% (+3.5% in Q1) so that net exports added +0.5pp to Q2 growth (-1.2pp in Q1). Industrial production and retail data were still strong in July, but the Manufacturing PMI fell to a 22-month low of 51.4 points in August, indicating weakening activity in the months to come. We also expect investment activity to ease somewhat from H2 due to base effects and forecast full-year growth of +4.6% in 2018 and +3.5% in 2019.
