According to the EMAE (official monthly GDP proxy), activity fell sequentially by 1.4% MoM/SA in November (0.0% in October), leading to a 1.0% QOQ/SA in the quarter ended in that month (down from 2.8% QOQ/SA in October). On a year-on-year basis, activity declined 0.9% in November (below the Bloomberg market estimate of -0.6%) and fell 0.3% in the quarter ended in that month.
Mixed results across sectors in the quarter ended in November. Primary activities rose by 1.7% yoy in the period (-2.2% yoy in 3Q23), leaving behind the significant effects of the drought, while manufacturing contracted by 3.3% yoy in the period (-3.8% yoy in 3Q23), likely affected by several import controls. On the other hand, construction expanded by 2.9% yoy (+5.5% before), while services registered a gain of 1.1% yoy in the period (+2.2% in 3Q23).
We expect a GDP contraction of 2.5% for 2024, after an expected 1.5% contraction in 2023. In our view, the expected acceleration of inflation after the sharp currency devaluation will hit real wages (in particular in 1Q24), while an ambitious stabilization program should support fiscal consolidation efforts yet affect short-term activity dynamics. On the other hand, the normalization of the agriculture sector after a severe drought in 2023 and the positive effects of the announced deregulation of the economy could boost activity over time.