Itaú BBA - ARGENTINA – Activity surprised to the upside in October

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ARGENTINA – Activity surprised to the upside in October

December 23, 2020

All sectors posted sequential gains in the quarter ended in October.

Activity continued to recover in October, driven by the easing of mobility restrictions. The EMAE (official monthly GDP proxy) grew 1.9% mom/sa in October, significantly above our call (-0.5% mom/sa). Thus, the EMAE expanded 7.9% qoq/sa in the quarter ended in October, from 12.8% in 3Q20. On a year-over-year basis, activity fell 7.4% in October and 8.4% in the quarter ended in that month (-10.2% in 3Q20). We note that economic activity is still 5.4% below January’s level.

All sectors posted sequential gains in the quarter ended in October, according to our seasonal adjustment. Activity in the Construction sector grew 41.1% qoq/saar, vs. 204.2% in 3Q20. The Service sector output increased by 78.7% annualized for the quarter ended in October (vs. 89.1% qoq/saar in 3Q20), mostly due to the easing of restrictions, particularly in the Commerce sector. Manufacturing output increased by 27.1% qoq/saar, compared with an expansion of 66.1% in 3Q20, while primary activity grew by 10.2% qoq/saar (vs.11.2% in 3Q20). 

On a year-over-year basis, all sectors posted contractions but at a slower pace than in previous months. Services shrank by 24.1% yoy vs. a drop of 31.2% in 3Q20. The Construction sector fell 23.2% yoy in the same period, compared with -27.0% yoy in 3Q20. Manufacturing slid 3.6% vs. -5.3% in 3Q20. Finally, Agriculture, mining and fishing activity retreated 5.4% yoy after a decline of 7.0% in the previous quarter.



The sequential recovery of activity introduces upside risk to our GDP forecast of -11% for this year. For 2021, we still expect modest 4.5% growth, as exchange-rate controls and declining confidence will likely drag down the economy. A tightening of restrictions as COVID-19 cases increase is another risk.

Juan Carlos Barboza
Diego Ciongo



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