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Solid internal demand expansion is unlikely to last amid a softer external scenario

Julio Ruiz


Gross Fixed Investment (GFI) grew 9.4% yoy in December (from 7.4% in November), above our forecast of 6.5% and market consensus of 6.4% (as per Bloomberg). Adjusting the figures for working days, GFI grew at a faster pace of 10.4%, taking the 4Q22 rate to 8.0% (from 3.8% in 3Q22). According to the calendar-adjusted breakdown, 4Q22 annual growth in construction investment stood at 3.0% (from -4.1% in 3Q22), while machinery & equipment investment stood at a strong 14.1% (from 14.2%).

GFI expanded at a strong 2.7% mom/sa in December, with a positive momentum. The quarter-over-quarter annualized growth rate (qoq/saar) stood at 14.4% in 4Q22 (from 2.7% in 3Q22). Looking at the breakdown, construction investment qoq/saar improved to 17.6% in 4Q22 (from -3.1% in 3Q22) driven mainly by non-residential construction investment, while machinery & equipment investment came in at 6.4% (from 9.4%). We note private investment just reached the level at beginning of the current administration (December 2018).

Private consumption also posted a solid sequential expansion, but momentum remained soft. The monthly proxy for private consumption expanded by 3.9% yoy in December (using calendar-adjusted figures), with the 4Q22 annual growth rate at 4.5% (from 6.4% in 3Q22). At the margin, private consumption expanded 1.0% mom/sa, taking the qoq/saar figure to 1.4% in 4Q22 (from 1.8% in 3Q22).

We expect activity to slow down this year as the U.S. economy decelerates and amid a tighter monetary policy stance.

Julio Ruiz