Activity remained virtually flat in March (up 0.1% mom/sa), following a significant upward revision of 1.1% for January and 0.5% for February (from 0.5% and 0%, respectively, before). The EMAE (official monthly GDP proxy) increased by 3.4% qoq/saar, from a loss of 5.9% qoq/saar in 4Q22. Activity rose by 1.3% yoy in March, outpacing the Reuters market estimate of a 0.1% increase.
Primary activities showed a year-over-year decline in 1Q23, affected by the drought. Primary activities decreased by 2.1% yoy in the period (from -1.6% in 4Q22), affected by a poor grain harvest. All other sectors expanded in the quarter. Services registered a 2.9% yoy gain in the period (from 4.6% in 4Q22) and Manufacturing expanded by 2.9% yoy (from 1.3% in 4Q22), followed by Construction at 2.7% yoy (from 1.6% previously).
At the margin, all sectors but primary activities expanded in 1Q23, according to our seasonal adjustment. Primary activities decreased by 4.6% qoq/saar in 1Q23, from a loss of 12.6% qoq/saar in 4Q22. The Service sector posted a gain of 17.4% qoq/saar (from a loss of 12.1% qoq/saar in December), while the Manufacturing sector expanded by 8.5% qoq/saar (from a drop of 7.7% in 4Q22). Construction increased by 12.7% qoq/saar in March, from a drop of 13.3% in 4Q22.
We forecast a 4% contraction in activity this year, reflecting the harsh drought and fragile macro fundamentals.