Itaú BBA - Activity recovery continues in Argentina

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Activity recovery continues in Argentina

May 2, 2019

The EMAE (official monthly GDP proxy) printed the third consecutive increase in February.

Talk of the Day


Activity posted another sequential gain in February. The EMAE (official monthly GDP proxy) printed the third consecutive increase, expanding by 0.2% mom/sa relative to January and taking the quarter-over-quarter growth into positive territory (1.5% annualized, from -4.8% in the quarter ended in January). In year-over-year terms, activity still fell by 4.8% in the month, but came in slightly better than the market consensus (-5.0%). Our seasonal adjustment indicates that all sectors posted a sequential recovery in the quarter ended in February. 

We forecast a GDP contraction of 1.2% in 2019. The recent performance is consistent with some stabilization of the economy. While we expect activity to retreat in March, growth (adjusted by seasonality) will likely be positive in 1Q19, due to bouts of financial instability. For 2019, the risks to our base-case economic scenario are high.  The perception of reversal of economic policies, fueled by recent electoral polls, could trigger further exchange-rate depreciation, which, in turn, will keep inflation high, confidence low and prevent interest rates from falling, with negative consequences for activity.
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Day Ahead: April’s trade balance will be released at 3:00 PM, for which we expect a USD 6.9 bn surplus, above the USD 5.9 bn observed in the same month of last year. In month-over-month terms, exports are set to increase 4.5%, while imports are set to decline 7.1%. Over 12 months, we expect the trade balance to increase slightly to USD 57.9 bn (from USD 56.9 bn), while the 3mma/saar rate picks up to USD 59.0 bn from USD 57.8 bn.

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