First estimates indicate that real GDP growth decelerated to +1.3% y/y in Q3, down from +1.9% in Q2. The outcome in Q3 was disappointing as increased oil production and higher oil prices as well as the FIFA World Cup had led to expectations of stronger growth. But monthly activity data painted a mixed picture. Real retail sales growth edged down to +2.9% y/y in Q3 from +3.1% in Q2, indicating that private consumption remained the key albeit slowing growth driver in Q3. The increase in calendar-adjusted industrial production picked up to +2.8% y/y in Q3 from +2.6% in Q2. However, agriculture dropped by -6.1% y/y and construction output fell by -0.4%. Uncertainty regarding new U.S. sanctions have possibly curtailed corporate investment in Q3. Looking ahead, early indicators point to a rebound in Q4. Industrial production growth accelerated to +3.7% y/y in October. And the Manufacturing PMI improved to a six-month high of 51.3 points in October, up from an average 49.0 in Q3 and back into growth territory. Moreover, the Services PMI jumped to an 11-month high of 56.9. Overall, we maintain our real GDP growth forecasts of +1.6% in 2018 and +1.5% in 2019.
