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We expect December IMACEC to increase by 0.7% YoY, but risks are tilted to the downside.
2024/01/31 | Andrés Pérez M., Vittorio Peretti & Ignacio Martinez Labra

Retail sales dynamics were in line with expectations in December, while manufacturing surprised to the downside. Retail sales (including vehicles) rose 0.5% MoM/SA in December (-0.6% in November). In annual terms, retail sales contracted 1.6% YoY (-2.5% YoY in November), the smallest contraction since April 2022. While retail sales should continue to sequentially improve, we expect to positive annual prints starting in 2Q24. The negative annual print in December was broadly in line with market expectations (BBG: -1.8%; Itaú: -1.5%). Separately, manufacturing dropped 0.4% MoM/SA (-1.6% in November), consistent with a 1.8% YoY decline (+4.6% previously), below the Bloomberg market consensus and our forecast (+1.7%). Volatile mining fell by 2.2% Mom/SA, falling back to negative territory (-3.7% YoY). As a result, industrial production (grouping manufacturing, mining, and utilities) contracted 2.7% YoY. Overall, we expect an IMACEC to increase by 0.7% YoY (to be published February 1), leading a 0% variation for 2023, but risks are tilted to the downside due to the large mining drop and weaker-than-expected manufacturing. 


Activity gains some traction at the margin. Durable retail sales fell a mild 0.1% YoY in 4Q23 (-6.6% in 3Q), while non-durables decreased by 4.3% (-7.7% in 3Q). Total retail sales dropped 3.5% during the fourth quarter, a smaller contraction than the 7.5% drop in 3Q23. Manufacturing increased 3.9% (-0.1% in 3Q), while mining was weaker (-2.1% during 4Q; +3.2% in 3Q), resulting in a total industrial production rise of 0.7% (1.3% in 3Q). In seasonally adjusted terms, retail sales increased 9.9% qoq/saar (snapping back from the 6.4% fall in 3Q23), while manufacturing rose by 9% qoq/saar (+1% in 3Q23). Overall industrial production increased 0.8% (building on from the +7% in 3Q23), despite the mining deterioration in the quarter.

Lower interest rates and inflation will support a gradual sequential recovery in economic activity, but downbeat private sentiment, softening employment indicators will likely lead to a below-potential 1.7% growth in 2024. The BCCh will publish the monthly GDP proxy (IMACEC) for December on February 1, in which we expect an annual rise of 0.7%, with risks tilted to the downside after today’s release of sectorial data by the INE.