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Agricultural sector and construction output were the main drags to activity.
2023/12/15 | Julio Ruiz

The monthly GDP proxy fell by 0.8% yoy in October (from -1.3% in September), in line with our forecast and broadly in line with market expectations of -0.9% (as per Bloomberg). The headline figure was dragged by the agricultural sector (-7.6%), construction (-9.1%) and manufacturing (-2.7%), while commerce and services expanded at a soft pace of 1.4% and 0.3%, respectively. On the other hand, fishing output expanded at an eye-popping growth rate of 51.6%, reflecting base effects. The quarterly annual rate of the monthly GDP fell by 0.9% in October (from -1.0% in 3Q23), with primary and non-primary activity at 3.3% (from 3.4%) and -1.8% (from -2.1%), respectively. 


At the margin, momentum remained weak. Using official seasonally adjusted series, the monthly GDP expanded at a soft 0.1% mom/sa in October, taking the quarter over quarter (non-annualized) growth rate to 0.7% in October (from 0.2% in 3Q23).



Our GDP growth forecast of 0.2% for 2023 has a downward bias, given a softer than expected recovery in the first four months of 2H23. We expect activity to continue recovering in the last two months of the year. Weak activity amid continued progress in the disinflationary process, will likely lead the central bank to continue cutting its policy rate (by 25-bp) in 1H24, reaching an end of year level of 5.00%.