Trade figures were disappointing in November. USD-denominated exports growth slowed to +5.4% y/y (from +15.6% in October) and imports growth slowed to +3% (after +21.4% in October). The slowdown reflects a correction after a higher than expected performance in Q3 as corporates frontloaded new orders before a potential rise of tariffs (previously scheduled for January). We expect trade figures to remain week in December before recovering slightly in the first half of next year as U.S.-China relations normalize. Meanwhile, headline inflation slowed to 2.2% y/y (after 2.5% in October) and producer prices rose a modest 2.7% (down from 3.3%), with the latter signaling some risk of deflation. We believe that the slower price growth is related to a combination of factors that include weaker oil prices, a wave of tariff cuts implemented by China and softer growth in domestic demand. Looking ahead, we expect consumer price inflation to remain relatively low in 2019 at 2.5% on average on the back of modest oil prices (we forecast USD69 per barrel) and slower economic growth (+6.3%).
