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Main private consumption determinants remain healthy.
2024/02/21 | Julio Ruiz

Retail sales fell by 0.2% YoY in December, below both - our forecast of +1.3% and consensus of +2.4% (as per Bloomberg). The calendar adjusted 4Q23 annual rate of retail sales stood at 2.0% (down from 3.6% in 3Q23). Also using calendar adjusted figures, the real wage bill, the key determinant of private consumption, rose at a resilient 4Q23 annual rate of 9.3% yoy (from 9.5% in 3Q23), with formal employment softening to 3.1% (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 (12.8% YoY in 4Q23), while remittances converted to pesos fell by 7.7% (explained by an appreciated currency) but recovering from -8.6% in 3Q23. At the margin, retail sales fell by 0.9% MoM/SA in December, taking the qoq/saar to -0.2% (from 3.0% in 3Q23). 


Our take: The weakening of retail sales in December is consistent with a softer GDP expansion in 4Q23. Tomorrow we will have the final GDP number for the last quarter of last year, which we expect to slow to 2.3% YoY, from 3.3% in 3Q23, taking the 2023 GDP growth to 3.1%.  This year we expect activity to expand 2.8% supported by an expansive fiscal stance and still supportive external demand. The nearshoring trend may also support activity.


See detailed data below