Real GDP growth edged down to +3.3% in 2018 from +3.5% in 2017, mainly a result of a decline in net exports as strong import growth of +6% outpaced exports (+4.5%) after both increased at the same pace in 2017 (+5.1%). Imports were boosted by an acceleration in both public spending (+4.3% in 2018) and consumer spending growth (+3.9%). The latter was driven by a rebound in demand for vehicles, supported by low inflation (0.8% on average in 2018), average nominal wage growth of +2.9% and declining unemployment (4%). Overall fixed investment growth slowed to +2.6% and showed a mixed picture in 2018 as strong industrial investment expansion of +8% was in part offset by the sharp -8.3% drop in residential construction. A look at quarterly figures shows that economic momentum slowed in H2 2018, notably investment and external trade activity, perhaps as global growth fears have been on the rise heading into 2019. Looking ahead, investment and exports should remain somewhat restrained and we forecast GDP growth of +3.1% in 2019. Growth could pick up in 2020 thanks to natural gas production coming on stream, but external headwinds may limit the pace of expansion.
