Surprisingly strong GDP growth in Q3

According to the preliminary data, GDP expanded by 4.8 percent year-on-year, a rate well above expectations. Even more notably, the seasonally and working day adjusted growth rate was as high as 5 percent, the third highest among EU member states. This means that the decelerating trend seen from the beginning of the year – in accordance with the fact that the present growth cycle is past its peak, both globally and in Europe – has been interrupted. The quarter-on-quarter growth rate – 1.2 percent – is also a slight acceleration compared to the second-quarter.

There is no doubt that the main driver of growth is still private consumption, which probably expanded at a dynamic pace close to 5 percent. Yet, the most likely source of the growth rate defying expectations is fixed capital formation, largely driven by state-generated demand. As the acceleration of contruction output growth suggests, the slowdown in fixed investment growth may have halted temporarily in the third quarter.

In the light of the favorable third-quarter numbers, GDP grew by a cumulative 4.7 percent during the first three quarters of 2018. It is virtually certain now that the annual average growth rate will surpass 4.5 percent – the question is only to what degree.

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