Real GDP growth strengthened to an average +4.2% y/y in H1 2019 from +3.1% in full-year 2018. However, quarterly data already indicate a downtrend from +4.5% y/y in Q1 to +3.8% in Q2. The latter was primarily driven by a strong +7.4% increase in consumer spending, boosted by rapid wage growth and declining unemployment. Net exports also contributed +1.3pp to Q2 growth, but this was not a sign of economic strength but rather reflecting that real imports (-5.1% y/y) dropped more sharply than exports (-3%). Monthly data suggest that the downtrends in external trade have likely continued in Q3, reflecting the impact of weakening global and Eurozone demand, while the current account surplus surged to +7% of estimated GDP in August (from 5.4% in 2018 as a whole). Meanwhile, industrial production growth continued to weaken, from +3.5% y/y in Q1 to -0.1% in Q2 and an estimated -1.7% in July-August. Overall, we forecast full-year GDP growth of +3.5% in 2019 and +2.5% in 2020.
