ARGENTINA – Activity dropped in May affected by mobility restrictions

We forecast GDP growth of 6.5% for 2021, from a 9.9% decline in 2020

Juan Carlos Barboza & Diego Ciongo

21/07/2021


The EMAE (official monthly GDP proxy) fell by 2.0% mom/sa in May, in line with the Bloomberg market consensus. Despite an upward revision of the previous months’ readings, the EMAE fell by 0.4% qoq/sa (non-annualized) in May, down from an expansion of 2.6% qoq/sa in 1Q21. Activity grew 13.6% yoy in May – favored by the positive base effect of the strict lockdowns in the same period a year earlier – and 17.8% in the quarter ended in May (up from 2.5% in 1Q21).

 

Growth across all sectors moderated in the quarter ended in May, on a sequential basis. Construction increased by 3.7% qoq/saar (vs. 19.8% in 1Q21), while Manufacturing output was up by 16.6% qoq/saar (from 26.1% in 1Q21). Primary activities and the Service sector increased by 6.3% qoq/saar and 20.5%, respectively (from 9.8% and 22.8% in 1Q21). Still, all sectors registered higher year-over-year expansion due to base effects. The Construction sector grew 81.0% yoy in the quarter ended in May, up from a 21.3% yoy gain in 1Q21. Manufacturing increased by 37.1%, (1.4% in 1Q21). Agriculture, Mining and Fishing activity increased by 0.6% yoy, after a 0.1% yoy gain in the first quarter of 2021. Finally, Services expanded by 29.6% yoy, vs. a drop of 5.7% in 1Q21.

 

We forecast GDP growth of 6.5% for 2021, from a 9.9% decline in 2020. We expect a rebound in activity in June, following easing of mobility restrictions, but this is unlikely to prevent a sequential decline in 2Q21. Interventionist policies are likely to continue to constrain the recovery for the remainder of the year.

Juan Carlos Barboza
Diego Ciongo