Growth edged up to +0.6% q/q (+2.2% annualized) in Q3, after a recession in H1 (-0.7% in Q1 and -0.1% in Q2). Combined this means that Q3 GDP was still below the level observed at end-2017. The Q3 recovery was driven by the agricultural sector (+1.2% q/q after -6.9% in Q2) as well as the manufacturing sector. However, mining output remained in negative territory (-3.5%) as well as construction output (-1.9%, the fifth consecutive quarterly deterioration). In our view, the recession in H1 was not broadly based as key manufacturing and services sectors still showed growth. However, the difficult situation in the labor market, low confidence in the private sector and the consequence of the wage bargaining process weigh on the investment outlook. Low growth also means that debt is likely to rise. The debt due next year is already at 87% of foreign reserves. The growth outlook for Q4 is not vibrant since power blackouts are likely. We expect growth of +0.7% in 2018 as a whole and +1% in 2019.
