Real GDP growth decelerated from +3% in full-year 2015 to +1.9% y/y in Q1 and +1.4% y/y in Q2 2016. In the first half of 2016, robust growth was recorded in manufacturing (+6.5% y/y), financial services (+5.5% y/y) and other private-sector services (+5.3% y/y) while construction (-1.6% y/y) and pubic-sector services (-1.2% y/y) contracted.
Modest growth was posted by trade, transport, accommodation and food services (+1.6% y/y). EH forecasts full-year growth of about +1.6% in 2016, followed by +1.7% in 2017 and +2% in 2018.
Consumer prices have been in deflationary territory since end-2014, but EH expects modest positive inflation to return in 2017 (+0.7% on average).