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Still, momentum is slowing.
2023/12/20 | Julio Ruiz

Retail sales rose by 3.4% YoY in October, above both - our forecast and consensus of 2.0% (as per Bloomberg). The calendar adjusted quarterly annual rate of retail sales rose to 2.8% in October (from 3.6% in 3Q23). Also using calendar adjusted figures, the real wage bill, the key determinant of private consumption, rose at a solid quarterly annual rate of 9.6% yoy October (practically unchanged from 3Q23), with formal employment growing 3.4% (from 3.6%), while nominal wages increased 10.7% (practically unchanged from 3Q23). The real wage bill is also supported by lower inflation. Real consumption credit from commercial banks continues to expand at a strong pace (13.3% quarterly YoY in October), while remittances converted to pesos fell by 4.7%, dragged by the appreciated currency. At the margin, retail sales expanded 0.8% MoM/SA in October, taking the qoq/saar to 1.1% in October (from 3.7% in 3Q23).


Our take: While retail sales surprised to the upside in October, momentum is expectedly slowing. We expect the economy to decelerate in the last quarter of the year, after solid growth in the first three quarters. We forecast GDP to rise by 3.4% in 2023. Next year, we expect activity to decelerate to a still above trend growth of 2.8%, supported by an expansionary fiscal stance which will mitigate a slower external demand.


See detailed data below



Julio Ruiz