Real GDP growth regained momentum and accelerated to +6.2% y/y in Q3 from +5.5% in Q2. Domestic demand was the sole growth driver in Q3, also because the government accelerated projects following the late approval of the 2019 budget in April. Public spending growth resurged to +9.6% (+7.3% in Q2) and public construction investment rebounded to +11% (reversing a -27.2% drop in Q2). Overall fixed investment recovered to a +2.1% increase in Q3 (-4.6% in Q2) but inventory destocking made a negative contribution to growth. However, the latter is a good sign for growth in the coming quarters as there may be a need for catch-up capital spending. Meanwhile, consumer spending picked up to +5.9% in Q3 (from +5.5% in Q2) supported by lower inflation and interest rate cuts. In contrast, net exports decelerated substantially, adding just +0.1pp to Q3 growth (+3pp in Q2) as both exports (+0.2%) and imports (0%) grounded to a halt. Overall, there is now potential for an upward revision of our current growth forecast of +5.3% for 2019.
