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ARGENTINA – Economic activity index improved in August

October 22, 2020

We forecast a GDP contraction of 12% this year.

Activity continued to recover in August on a sequential basis. The EMAE (official monthly GDP proxy) grew 1.1% mom/sa, compared with our call of 0.5%. Activity declined by 11.6% on a year-over-year basis, better than our forecast of -13% and -12% according to the Bloomberg survey. As July figures were upwardly revised, the EMAE posted an increase of 8.5% qoq/sa in the quarter ended in August, up from a drop of 16.2% in 2Q20. Indec reported that, because methodological changes were introduced to address the impact of COVID-19 on seasonality, the seasonal adjusted figures may vary when 3Q20 GDP statistics are published.



There was a broad-based sequential improvement across sectors in the quarter ended in Augustaccording to our seasonal adjustment.
Activity in the Construction sector grew 216.7% qoq/saar, from a decline of 81.8% in 2Q20. Manufacturing output increased by 76.1% qoq/saar, compared with a decline of 42.9% in 2Q20. The Service sector output increased by 6.4% annualized in the quarter ended in August (vs. -81.6% qoq/saar in 2Q20), while primary activity grew by 1.3% qoq/saar (vs. -18.2% in 2Q20). 

All sectors still continued to post a year-over-year contraction in the quarter ended in August. Services shrank by 35.2% yoy, vs. a drop of 43.4% in 2Q20. The Construction sector fell by 31% yoy in the quarter ended in August, from -52.1% yoy in 2Q20. Manufacturing fell by 7.6%, vs. -20.8% in 2Q20. Finally, Agriculture, mining and fishing activity retreated by 10.1% yoy, after a decline of 12.0% in the previous quarter.


 
We forecast a GDP contraction of 12% this year. Activity has rebounded as expected, hand in hand with the easing of lockdowns, but tighter capital controls and decline in confidence remain downside risks to our projection.

Juan Carlos Barboza
Diego Ciongo



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