Itaú BBA - ARGENTINA – Activity rebounded in 3Q20

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ARGENTINA – Activity rebounded in 3Q20

November 24, 2020

We forecast a GDP contraction of 12% for this year, but the risks are tilted to the upside

Recovery of activity continued in September. The EMAE (official monthly GDP proxy) grew 1.9% mom/sa in September, in line with consensus, according to the Bloomberg survey. Activity declined by 6.9% on a year-over-year basis. As July and August figures were upwardly revised, the EMAE posted an increase of 13.1% qoq/sa in 3Q20, up from a drop of 16.5% in 2Q20. Indec reported again that, because methodological changes were introduced to address the impact of COVID-19 on seasonality, the seasonally adjusted figures may vary when 3Q20 GDP statistics are published. We note that overall economic activity is still 7.6% below January’s level.


All sectors posted a sequential improvement in 3Q20 according to our seasonal adjustment. Activity in the Construction sector grew 191.7% qoq/saar, from a decline of 82.2% in 2Q20. Manufacturing output increased by 66.6% qoq/saar, compared with a decline of 43.2% in 2Q20. The Service sector output increased by 73.8% annualized for the quarter ended in September (vs. -80.9% qoq/saar in 2Q20), while primary activity grew by 11.1% qoq/saar (vs. -18.4% in 2Q20). 

On a year-over-year basis, activity contraction was broad-based in 3Q20. Services shrank by 32% yoy, vs. a drop of 43.4% in 2Q20. The Construction sector fell by 29.5% yoy in the same period, from -52.1% yoy in 2Q20. Manufacturing fell by 5.2%, vs. -20.8% in 2Q20. Finally, Agriculture, mining and fishing activity retreated by 7.1% yoy, after a decline of 12.0% in the previous quarter.


We forecast a GDP contraction of 12% for this year, but the risks are tilted to the upside due to the stronger-than-expected sequential recovery in 3Q20. Activity has rebounded, hand in hand with the easing of lockdowns, but tighter exchange rate controls and a decline in confidence remain a drag on the economy.

Juan Carlos Barboza
Diego Ciongo

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