Economic growth has continued at a good pace in Q1 2019 (+5.6% y/y) as poor rains since March did not impact agricultural output (+5.3% y/y). This sector will be crucial for overall growth in the months to come since agriculture (21.3% of GDP) is highly reliant on rains. In 2017, poor rains cut about -1pp from overall GDP growth. Otherwise, growth dynamics are fairly strong as transportation, telecoms, trade and construction were still expanding at the pace seen in 2018, each contributing +0.5pp to GDP growth in Q1. Overall price and credit conditions remain supportive. Inflation is still quite low (+5.7% y/y in June) and 10-year government bond yields went below 12% (a very low level compared to peers). Low inflation supports private consumption which is expected to be the main growth contributor (adding about +4.5 pp to growth in 2019). Fiscal consolidation is underway, but its pace should not hurt growth, which is expected to reach +5.4% in 2019.
