• Economic activity accelerated in 2Q18 and leading indicators suggest firm growth in 3Q18. We adjusted our YE18 GDP growth forecast to 4.5%, from 4% previously.

• Inflation remains around the BCP target of 4% (± 2%). We maintain our YE18 inflation forecast at 3.7% due to the expected deflationary impact of the border trade.

• The PYG depreciated slightly in September, curbed by the central bank’s USD sales in the FX market. We maintain our YE18 exchange rate forecast of PYG/USD 5.950.