Real economic growth moderated to +6.5% y/y in Q3 from +6.7% in Q2 due to a slowdown in the industrial sector (+5.3% y/y in Q3 after +6% in Q2). The services sector remained robust with growth of +7.9% y/y (after +7.8% in Q2). Monthly activity indicators also pointed to modest growth in industrial production (+5.8% y/y in September) as well as in investment (+5.4% y/y in January-September). On the positive side, retail sales growth remained resilient and edged up to +9.2% y/y (from +9% in August). Following the GDP release, authorities have reaffirmed their commitment to support growth in order to ease financial market fears with additional measures to support the private sector (e.g. tax cuts, support to the financial market). Looking ahead, we maintain our full-year growth forecasts of +6.6% in 2018 and +6.3% in 2019. While we expect domestic demand to provide some resilience as accommodating fiscal (e.g. tax cuts, infrastructure spending) and monetary policies (e.g. cuts in reserve requirement ratios) have begun to have an impact, net trade will likely be less supportive to growth following the implementation of protectionist measures in the U.S.
