First estimates indicate that Q1 real GDP rose by +4.3% y/y (up from +3.6% in Q4 2017) and +1.4% on a q/q annualized basis (+2.1% in Q4). Growth was driven by a strong performance of the manufacturing sector (+10.1% y/y) with all clusters in the sector increasing, notably the electronics and precision engineering clusters. Services posted robust growth of +3.8% y/y in Q1 (+3.5% in Q4), mainly thanks to solid momentum in the financial and wholesale and retail trade sectors. Meanwhile, construction output continued to contract for the seventh consecutive quarter, by -4.4% y/y in Q1, as both private and public sector building activities fell. Euler Hermes forecasts full-year growth to ease to +2.9% in 2018 (from +3.6% in 2017). In February, CPI and core inflation picked up to 0.5% and 1.7% y/y (from 0% and 1.4%), respectively. As the Monetary Authority expects upward price pressures to persist this year, it tightened monetary policy last week.