3Q17 GDP expanded by a robust 2% q/q, ahead of consensus forecasts, but below our bullish call. 2Q17 GDP was upwardly revised to 2.8% q/q from 2.5%.

Growth was almost entirely driven by the agriculture, mining and manufacturing sectors, which expanded by 44.2% q/q, 6.6% and 4.3% respectively, making up 1.9pps of the quarterly figure.

Activity in the utilities (-5.5% q/q) and construction (-1.1% q/q) sectors remain in the doldrums on the back of weak electricity demand and a dearth of sustained fixed investment. Nevertheless, gross fixed capital formation jumped 4.3% in the quarter, with government, SOEs and the private sector expanding 4.4% q/q, 4.8% and 4.1% respectively.

The biggest downside surprise was a –0.4% q/q contraction in the trade, catering and accommodation sector, for which we had pencilled in an expansion. This was particularly surprising in light of household consumption expenditure having jumped 2.6% q/q in 3Q17. The impetus stemmed from a 19.9% q/q jump in durable goods consumption, and a 4.4% increase in semi-durables. Financial, real-estate and business services growth softened moderately to 1.2% q/q, while the government sector contracted by –0.7% in line with fiscal constraints.

Growth for the three quarters of 2017 is averaging 1%, and given our expectations of a strong showing from retail in 4Q17, we are likely to upwardly revise our full year growth forecast which currently stands at 0.7%.

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