Real GDP contracted by -0.3% q/q in Q3 2018 (from an upwardly revised +0.8% q/q in Q2) as natural disasters and bad weather disrupted domestic spending and exports. Apart from government consumption (+0.2% q/q) and private residential investment (+0.6% q/q), most major GDP components contracted. In particular, exports of goods and services dropped by -1.8% q/q, while private consumption declined by -0.1% q/q. Looking ahead, advanced indicators suggest that growth has bounced back in October. The Manufacturing PMI improved to 52.9 points (from 52.5 in September) with the output and new orders sub-components indicating stronger growth. The Services PMI increased too (to 52.4 from 50.2) as corporates point to stronger growth in new business and output. In that context, we expect growth to register a mechanic recovery in Q4 (i.e. due to base effects as Q3 was distorted by natural disasters). Overall, we forecast full-year 2018 growth at +1% (after +1.7% in 2017).
