2018 GDP growth came in at a disappointing +1.1%, the same as in 2017, after a year of financial volatility and a strike that had non-negligible effects on economic activity and confidence. The recovery is exceptionally torpid given that the economy contracted -3.5% in both 2015 and 2016; GDP hence remains below its peak of 2014. Yet 2018 showed an acceleration in private consumption (+1.9% after +1.3% in 2017) and a rebound in investment (+4.1% after -2.6% in 2017), which were matched by soaring imports (+7.6%) negatively contributing to growth. Exports did not keep up (+3.4%) due to an uneven harvest, despite goods exports to China rising again by a third. The outlook for consumption in 2019 is only mildly positive as unemployment is falling slowly. Investment may continue to recover with the return of confidence, supported by privatizations in H2 and a still accommodative monetary policy stance this year. But the pension reform could disappoint, putting pressure on borrowing costs again. We see growth of just around +2% in 2019; a reality check is predictable amid current optimism.
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Weekly Export Risk Outlook 6 March 2019