The final release of Q3 GDP showed a slight upward revision to quarterly growth from 0.2% to 0.3%, or 1.6% year-on-year (seasonally adjusted). With public consumption and external demand likely to be less of a drag this quarter, we expect Q4 GDP growth to accelerate to 0.4-0.5%, yielding 2016 growth of 1.4%, slightly higher than our forecast of 1.3% last month. In 2017, tight labour market conditions and the anticipated 15-25% hike in minimum wages should stimulate higher consumer spending, which along with a gradual pick-up in the absorption of EU funds should result in GDP growth accelerating to 2.3%. Fragile external demand, on the back of multiple uncertainties related to Brexit, the Trump presidency in the US and elections in France and Germany, remains a key downside risk to our forecast.
