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< BackIndustrial production growth was driven by manufacturing output and construction
Industrial production (IP) surprised to the upside in October. IP stood at -3.3% year-over-year in October, above our forecast of -5.9% and market expectations of -5.5% (as per Bloomberg). According to figures adjusted by working days, IP contracted at a slightly slower pace (-3.0% year-over-year), taking the quarterly annual rate to -6.0% in October (from -8.8% in 3Q20). Construction and manufacturing output fell by 13.1% year-over-year in the quarter ended in October (from -17.8% in 3Q20) and -4.4% (from -7.1%), respectively, while mining stood at -2.5% (from -3.2%).
Industrial production is closer to pre-pandemic levels. Using seasonally adjusted figures, IP monthly growth rate accelerated in October to 2.0% month-over-month (from 0.6% in September), driven mainly by construction (3.6%) and manufacturing (1.8%) output. Industrial production is closer to pre-outbreak levels (4.4% down from February). Given the weak base of comparison, the quarter-over-quarter annualized growth rate (qoq/saar) of IP stood at 74.8% in October, supported mainly by manufacturing output (97.6%), while construction output and mining stood at 79.7% and 14.2%, respectively.
We expect GDP growth for 2020 and 2021 of -9.0% and 4.0%, respectively, supported mainly by the external demand. On the other hand, a modest fiscal stimulus and prevailing uncertainties over domestic micro policies are likely to curb internal demand growth. A retightening of social distancing measures amid the recent sharp increase in the outbreak is a short-term downside risk to our economic outlook.
Julio Ruiz
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