Industrial production increased by +2.4% y/y in November, down from +3.7% in October. The deceleration was mainly due to a stagnation in the manufacturing sector which was a result of a sharp drop in the automotive sector (-37.3% y/y) and a marked slowdown in metals (+7.2%, after +19.6% in October). In contrast, retail sales growth accelerated to +3% y/y in November from +2% in October, reflecting increased consumer activity ahead of the VAT rise at the start of this year. Meanwhile, the Composite Output index fell to 53.9 points in December (from 55.0 in November) as both the Manufacturing PMI (to 51.7 from 52.6) and the Services PMI (to 54.4 from 55.6) eased. However, the declines were mainly a result of weaker current business and increased cost burdens whereas the sub-components for new (domestic and export) orders rose and remained strong. This bodes well for sustained, albeit moderate growth in the first months of 2019. For the year as a whole, we forecast real GDP growth of +1.5%, slightly down from an expected +1.6% in 2018.
