The monthly GDP proxy (IMACEC) fell 2.1% over twelve months in March (0.5% drop in February), with mining once again the main drag. The 2.1% drop was below both the Bloomberg market consensus of 1.7% and our call of a 1.6% contraction (Central Bank analyst survey: -1.0%; implicit IPoM estimate: -1.2%). In monthly terms, activity fell by 0.1% from February (SA), building on the previous 0.4% decrease, with the decline driven by weaker mining (1.8% sequential fall). Non-mining IMACEC rose 0.2% sequentially (SA; the third consecutive increase), with services ex-commerce rising 0.9% (pulled up personal activity: likely education and health), while commerce fell 1.8% (SA). During the first quarter of the year, activity fell 0.9% yoy (2.3% drop in 4Q22), but gained 1.0% qoq/sa (lifted by services as the real wage bill rose during the quarter). The 0.9% annual drop in 1Q23 was larger than the Central Bank’s 0.6% forecast (EEE: -0.7%).
Activity improved sequentially in 1Q23. Activity fell 0.9% yoy during the first quarter, with non-mining contracted 0.7% (2.4% fall in 4Q22), with services (excluding commerce) increasing 1.4% (0.1% drop in 4Q22), while the commerce drag eased to 4.8% (-8.2% in 4Q22). Manufacturing contracted 0.9% (5.8% drop in 4Q). At the margin, total activity increased 3.9% qoq/saar (0% in 4Q22). Non-mining activity increased 6.4% qoq/saar (-1.7% in 4Q).
Business confidence remains low, suggesting the 1Q23 activity rebound is likely transitory. Think-tank ICARE’s non-mining business confidence during April came in at 36.2 points (50 = neutral; 38.2 in March), still around 12pp below average levels prior to the social unrest and pandemic. At the margin, barring the volatile mining, no sectors reported improvements, while construction remains low (26.4). Overall, business sentiment completed 15 months in pessimistic ground.
Tight monetary policy, the depletion of aggregate household savings, and still downbeat business sentiment suggest the non-mining activity weakness will resume in 2Q23. We expect a GDP contraction of 0.4% this year (2.4% last year), below the Central Bank’s 0% expectation. National account data will be released on May 18.
Andrés Pérez M.
Vittorio Peretti
Ignacio Martinez Labra