Itaú BBA - ARGENTINA – Activity increased by 2.8% in 2017

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ARGENTINA – Activity increased by 2.8% in 2017

February 28, 2018

Construction was the most dynamic sector in 2017

The EMAE (official monthly GDP proxy) expanded 2.0% yoy in December, leading to 2.8% growth in 2017, slightly below our GDP forecast of 2.9%. On a sequential basis, the economy grew 0.6% mom/sa, outpacing the downwardly revised growth of 0.3% in November, bringing quarter-over-quarter expansion to 1.3% (annualized) in 4Q17, down from the 3.6% gain posted in 3Q17. The EMAE left a statistical carryover of 1.4% for 2018. Indec, the official statistics agency, will publish the national accounts for 2017 on March 21.

Construction was the most dynamic sector in 2017. The sector increased 10% during the year, driven mostly by public sector infrastructure expenditures. Agriculture and primary activities increased by 4.8%, followed by the Service sector (3.1%) and Manufacturing (2.8%). In 4Q17, Construction grew 15.7% yoy, followed by the Service sector (3.2%), Manufacturing (2.8%) and primary activities (2.6%).

According to our seasonal adjustment, all sectors except Manufacturing decelerated sequentially in 4Q17. Construction rose 3.7% QoQ/saar, down from 28.2% in 3Q17. Primary production activities slipped 0.2% (+0.3% in the quarter ending September). Services fell 0.5%, following a 5.2% expansion in 3Q17. On a different tone, Manufacturing grew 11.8%, up from 10% in the previous quarter, helped by the recovery in Brazil. 

The recent activity data together with a smaller harvest due to the severe drought suggest lower growth for this year than we were expecting. We estimate a negative contribution of primary activities to GDP growth of 0.7%, which will partially offset the benefits of a better economic outlook for Brazil and an improved sentiment for investment. We now expect GDP to increase 2.8% this year, down from our previous projection of 3.5% growth.


Juan Carlos Barboza
Diego Ciongo

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