The monthly GDP proxy fell by 0.6% yoy in June (from -1.4% in May), falling slightly less than our forecast of -0.8% and market expectations of -0.7% (as per Bloomberg). Agricultural production (-1.5% yoy in June), fishing output (-68.9%) and the construction sector (-4.1%) remained weak, associated to harsh weather conditions (el Niño phenomenon). In contrast, mining output expanded at a solid pace (15.9%), but the services sector registered a soft expansion of 1.3%. The quarterly annual rate of monthly GDP fell by 0.6% in 1Q23 (from -0.4% in 1Q23), with primary and non-primary activity at 1.0% (from 4.7%) and –0.9% (from -1.7%), respectively.
At the margin, activity rebounded in June, but momentum remained soft. Using official seasonally adjusted series, the monthly GDP expanded 1.3% MoM/SA in June (after falling 1.3% in May), taking the quarter over quarter (non-annualized) growth rate to a still soft 0.2% in 1Q23 (from -0.8% in 1Q23).
Our 2023 GDP growth forecast stands at a below potential growth rate of +0.8%. The El Niño phenomenon will likely curb activity for the rest of the year in the context of a tight monetary policy stance.