Itaú BBA - ARGENTINA – Economic activity rebounded in July

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ARGENTINA – Economic activity rebounded in July

September 28, 2020

We expect the positive trend to consolidate with the easing of lockdowns in August and September

Activity recovered more than we expected in July, despite a temporary tightening of lockdowns during the first two weeks of the month. The EMAE (official monthly GDP proxy) grew 1.1% mom/sa, compared with our call of 0.5%. Activity declined by 13.2% on a year-over-year basis, beating our forecast of -15%. As a result, the EMAE posted a decline of 2.7% qoq/sa in the quarter ended in July, from  a drop of 16.2%  in 2Q20.



There was a broad-based sequential improvement in July, according to our seasonal adjustment. Activity in the construction sector grew 22.8% qoq/saar, from a decline of 81.9% in 2Q20. Manufacturing output increased by 9% qoq/saar, compared with a decline of 44.2% in 2Q20. Service sector output continued to decline, down 58.5% annualized in the quarter ended in July (vs. -86.6% qoq/saar in 2Q20), while primary activity decreased by 15.0% qoq/saar (vs. -18.2% in 2Q20). 

All sectors continued to post a year-over-year contraction, although at slower pace. Services contracted by 39.4% yoy in the quarter ended in July, vs. a drop of 43.4% in 2Q20. The construction sector fell by 37.4% yoy in the period, from -52.1% yoy in 2Q20. Manufacturing fell by 12.6%, vs. -20.7% in 2Q20. Finally, Agriculture, mining and fishing activity retreated by 11.7% yoy, after a decline of 12.0% in the previous quarter.



We expect the positive trend to consolidate with the easing of lockdowns in August and September. Given the upward revision of GDP growth for 1Q20 and the better-than-expected performance of activity, we revised upwardly our GDP growth forecast for 2020 to -12% from -12.7%.

Juan Carlos Barboza
Diego Ciongo



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