Real GDP grew by +1.8% y/y in Q2 2018. Although up from +1.3% in Q1 and +0.9% in Q4 2017, the outcome in Q2 was lower than expected as rising oil prices and the FIFA World Cup had suggested somewhat higher growth. Real retail sales expanded by +2.6% y/y in Q2, up from +2.2% in Q1, indicating that private consumption remained the key growth driver in Q2. The increase in industrial production picked up to +3.3% y/y in Q2 from +2.8% in Q1. However, the weakened Manufacturing PMI – at 48.1 points in July, the third consecutive month below the 50.0 mark and thus indicating contraction – points to slower industrial output growth in the coming months. However, this should be offset to some extent by higher oil output. Meanwhile, new U.S. sanctions against Russia announced on 8 August and the threat of further sanctions to come have hit Russian financial markets, with the RUB down by about -7% vs the USD, and could impact medium-term growth. Overall, we have revised our real GDP growth forecasts to +1.6% in 2018 and +1.5% in 2019 (both down from +1.8% previously).