Real GDP growth decelerated to a five-quarter low of +2.5% y/y in Q1 2019 (from +3.5% in Q4 and +3.3% in full-year 2018). As in 2018, growth was not balanced in Q1, mainly driven by surging consumer spending (+10.9% y/y) and fixed investment (+17.4%), with the latter boosted by a construction boom. However, inventories subtracted a hefty -5.9pp from Q1 growth. Government spending contracted by -8.3% y/y. External trade activity recovered somewhat and net trade subtracted only -0.4pp from Q1 growth (-2.4pp in full year 2018). On the production side, construction output soared by +26.8% y/y in Q1 while services and agriculture posted reasonable increases. Industrial production was the weak spot, declining by -1.5% y/y. We expect annual economic growth to stabilize at around +2.5% in 2019-2020, with private domestic demand to remain the key growth driver. Downside risks to our forecast include a renewed intensification of political instability and disruptions to international funding programs.
