The GDP proxy fell 0.2% MoM/SA, while non-mining activity also did so by 0.2% MoM/SA, both falling sequentially for the first time since February. The sequential declines were registered across most areas of the economy. Overall, activity increased by 3.2% YoY in May (Bloomberg consensus: 3.7%; Itaú: 3.8%; 2.5% in April). After adjusting for seasonal and calendar effects, IMACEC increased by 4.1%. Mining grew 10.3% YoY, and services rose by 2.4% (lifted by health). The downside surprise to our call came from milder manufacturing and commerce gains. Non-mining activity increased by 2.4% YoY (1.8% in April), while after adjusting for seasonal and calendar effects, activity increased by 3.3%.
The recent commerce pull is showing signs of normalization, as was anticipated in INE’s sectorial data released yesterday. Commerce contracted 1.3% QoQ/SAAR (the first downward adjustment in momentum 4Q23; +20% in 1Q25). Manufacturing also posted a sequential decline (-3.4% QoQ/SAAR; +5.8% in 1Q25). Mining momentum is surging (+23%), while service dynamics remain resilient (1.8% QoQ/SAAR; 3.3% in 1Q25). During the quarter ending in May, the IMACEC grew 3.1% YoY (2.3% in 1Q), while non-mining activity rose 2.7% YoY (in line with 1Q).
If activity levels were flat from May until the end of the year, the GDP proxy would rise by 2.3% in 2025. The June IPoM scenario incorporated an annual increase of 3.1% during 2Q25. The economy would need to grow by 3.5% YoY in June to match the scenario.
Our Take: We forecast 2025 GDP growth at 2.6% this year (near the upper end of the BCCh’s 2-2.75% range). While the transitory upside boost from consumer tourism and front-loading of public expenditure is set to fade during 2H25, the lagged positive effect from lower borrowing costs, still elevated real wage growth, upward trending private sentiment and improving mining investment dynamics should continue to support growth this year. However, weak commercial credit dynamics and a certain degree of slack in the labor market, place a negative bias to the near-balanced output gap, paving the way for the BCCh to continue cutting the policy rate later this month. The June IMACEC will be released on August 01. We preliminarily expect growth of between 3.0-3.5%.
