Real GDP growth maintained a strong pace of +5.1% y/y in Q3 (unchanged from Q2). However, the demand-side breakdown revealed that Q3 growth was mainly driven by domestic demand, in contrast to Q2 when it was broad-based. Private consumption rose by +4.5% y/y and government consumption by +3.6% in Q3. Capital formation rebounded strongly in Q3 after the temporary moderation in Q2, with fixed investment up by +9.9% y/y and inventories contributing +1pp to y/y growth. Meanwhile, external trade activity lost momentum in Q3, with exports up +4.9% y/y (+7.6% in Q2) and imports up by +6.9% (+6.5% in Q2) so that net exports subtracted -0.9pp from Q3 growth (+0.9pp in Q2). Looking ahead, real retail sales growth moderated to +4.4% y/y in October from an average +5.5% in Q3 and industrial output growth to +5% y/y from an average +5.9% in Q3. Moreover, the Manufacturing PMI dropped to a four-year low of 49.5 points in November. We expect the economy to cool in the coming quarters and forecast full-year GDP growth of +3.5% in 2019, after +4.9% in 2018.
