Macro Latam
< VoltarGross fixed investment (GFI) was broadly in line with market expectations. The monthly GFI fell by 8.6% year-over-year in February, above our forecast of -9.1% and slightly below market expectations (-8.3%, as per Bloomberg). Using figures adjusted by working days, GFI contracted at a sharper pace (-9.9%, from -8.5%), taking the annual quarterly growth rate to -7.4% in February (from -5.2% in January). Looking at the breakdown, also with calendar adjusted figures, construction investment fell by 6.8% year-over-year in the quarter ended in February (-5.1% in January), with both residential and non-residential construction investment contracting, while machinery & equipment investment decreased by 8.1% (from -5.3%).
At the margin, GFI momentum remained weak, with machinery & equipment investment deteriorating. With seasonally adjusted figures, GFI contracted 1.7% month-over-month, taking the quarter-over-quarter annualized rate (qoq/saar) to -4.1% in February (from -4.2% in January). Within GFI, construction investment improved to 5.4% qoq/saar (from -2.5%), supported by both non-residential construction output. In contrast, machinery & equipment spending deteriorated to -13.6% qoq/saar in February (from -4.7% in January).
On another note, private consumption weakened in February. The monthly proxy for private consumption grew at a soft pace in February (0.5% year-over-year, from 0.2% in January). The figure was boosted by positive calendar effect. According to figures adjusted by working days, private consumption contracted 0.6% year-over-year in February (from 0.2% in January), taking the annual quarterly growth rate to 0.1% in February (from 0.6% in January). At the margin, using seasonally adjusted figures, private consumption deteriorated, contracting 0.5% month-over-month (from 0.0%), with the qoq/saar at -2.2% in February (from -0.4% in January).
We expect internal demand to deteriorate sharply in 2020 amid the coronavirus outbreak and a modest fiscal stimulus. In addition, prevailing uncertainties over domestic policy direction will also keep denting investment outlook.
Julio Ruiz