Itaú BBA - ARGENTINA – GDP contraction in 2019

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ARGENTINA – GDP contraction in 2019

Fevereiro 21, 2020

Economic activity marked two years of recession.

Economic activity contracted in 2019, marking two years of recession. The EMAE (official monthly GDP proxy) decreased by 0.3% yoy in December. On a sequential basis, the EMAE increased by 0.2% mom/sa in December, after posting a sharp drop in the previous month (-1.6% mom/sa). During the last quarter of 2019, activity dropped by 1% yoy and 3.0% qoq/saar. As a result, activity declined by 2.1% yoy in 2019, following a 2.5% contraction in 2018. The national account figures are scheduled for publication on March 25.

Primary activities posted a marked deceleration in 4Q19, while the remaining sectors continued to decline on a year-over-year basis. Agriculture, Mining and Fishing expanded by 0.8% yoy in 4Q19 (from 6.9% in 3Q19), due to the normalization of agricultural output following the drought. The remaining sectors continued to contract. Construction activity dropped by 8.1% yoy in the last quarter of 2019 (from -4.8% in 3Q19), Manufacturing fell by 2.1% (from -4.7% in 3Q19) and Services contracted by 1.0% yoy (from -2.2% in 3Q19). 

Most sectors registered sequential declines in 4Q19. According to our seasonal adjustment, primary activities fell by 12.0% qoq/saar, down from a 1.5% gain in 3Q19. Manufacturing output decreased by 6.8% qoq/saar in December (-3.5% in September). The Construction sector plummeted by 18.6% qoq/saar, following a 9.4% decrease in the quarter ended in September. Finally, the Service recorded a slight gain of 0.7%, after sliding 1.9% qoq/saar in 3Q19.

We forecast a new GDP contraction in 2020. The statistical carryover for this year is -0.3%. While a slight rebound of consumption is likely, due to an improvement in real wages in a context of already-high dollarization of savings, we expect uncertainty and controls to hamper investment. Furthermore, lack of external financing is another constraint to internal demand recovery. We maintain our forecast of a 2% decline in GDP for this year. 


Juan Carlos Barboza
Diego Ciongo


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