Preliminary estimates show that real GDP growth picked up to +5.1% in 2018 from +4.8% in 2017. Demand-side details are only partly available as yet but indicate that growth was entirely driven by domestic uses (+5.1pp) while net exports made a zero contribution. Private consumption grew by +4.5%, down from +4.9% in 2017. Thanks to an increased utilization of EU funding for eligible projects, fixed investment rose by +7.3% in 2018 (+3.9% in 2017). GDP data for Q4 are not provided as yet but slowdowns in industrial production (to +4.3% y/y in Q4 from +5.9% in Q3) and retail sales (to +4.5% from +5.5%) point to a weakening in the final quarter. Moreover, the Manufacturing PMI remained below 50.0 for the third month in a row in January (48.2), reflecting mainly declining new orders, notably new export orders. As a result, we expect a weaker start to the year and a slowdown of full-year GDP growth to +3.5% in 2019. Meanwhile, headline inflation dropped to 1.1% y/y at end-2018. Consequently, the Monetary Policy Council today decided to keep its key policy interest rate at 1.5%.
