Q3 GDP growth registered a stronger slowdown than expected as it came in at +0.3% q/q, after +0.7% in Q2 and +1.2% in Q1. Compared to the same quarter last year, growth decelerated to +2.8% (y/y) from +5.1% in Q2. This slowdown should not be overestimated as Q1 and Q2 2017 were weak, leading to a strong rebound in Q3 2017. Activity in Q3 2018 was mainly driven by net exports (+1pp), private consumption (+0.4pp) and investment (+0.3pp). Then where’s the catch? The significant drag came from a change in inventories which subtracted
-1.4pp from the q/q figure. Previous inventory building resulted from (too) high business optimism (the more companies expect activity to sustain or accelerate, the higher the inventory increase). In Q3, companies hence moderated their enthusiasm and cut inventories as external conditions have toughened, the central bank has begun monetary policy tightening (+10pp policy rate hike to 2.60% in October), copper prices have eased and consumption has shown signs of slowing.
