Activity contracted sequentially again in January, affected by the collateral effects of the stabilization program. According to the EMAE (official monthly GDP proxy), activity fell by 1.2% MoM/SA in January (vs. a drop of 2.8% in December), leading to a contraction of 4.1% QoQ/SA in the quarter ended in January (down from -1.8% QoQ/SA in 4Q23). On a year-over-year basis, activity declined by 4.3% in January (better than the Bloomberg median of -6.3%) and fell by 3.2% in the quarter ended in that month (-1.5% yoy in 4Q23).
Mixed results across sectors. Manufacturing fell by 10.5% yoy in the quarter ended in January (vs. a drop of 6.2% yoy in 4Q23), while the Construction sector contracted 6.2% in the period (from +1.1% yoy in 4Q23). On the positive side, primary activities rose by 14.2% yoy in the period (vs.+6.2% yoy in 4Q23), reflecting the normalization of agriculture after a severe drought a year ago, while services registered a gain of 1.0% yoy in the period (vs. 1.1% in 4Q23).
We maintain our GDP growth forecast of -3.0% for 2024, affected by the expected drop in real wages and the sharp fiscal consolidation plan, but partially offset by the normalization of the agricultural sector after the severe drought in 2023.