Activity increased sequentially in May. According to the EMAE (official monthly GDP proxy), activity rose by 1.3% MoM/SA in May, after no change in April, leading to a drop of 0.8% QoQ/SA in the quarter ended in that month (from -2.6% QoQ/SA in 1Q24). On a year-over-year basis, activity rose by 2.3% in May (meanwhile Bloomberg median estimate a drop of -2.5%) and contracting by 2.6% in the quarter ended in that month (-5.1% yoy in 1Q24).
Six out of fifteen sectors rose on an annual basis in May. On the positive side, primary activities rose by 62% yoy in the period (vs.+9.9% yoy in 1Q24), reflecting the normalization of agriculture after last year's severe drought. Construction fell by 24.5% yoy in the quarter ended in May (from -19.7% yoy in 1Q24), affected by the freezing of public works, while manufacturing contracted by 16.6% yoy in the same period (vs. a drop of 13.7% yoy in 1Q24). Services (including the commerce sector) registered a decline of 4.3% yoy in the period (vs. -2.4% in 1Q24), likely affected by lower real wages in the same period.
Our take: Our GDP growth forecast for 2024 is -3.5%. While economic activity has recovered to levels seen in December, a material and persistent rebound at least requires an improvement in investment. Importantly, the stabilization program has delivered swift results on the fiscal front, trade, and inflation fronts.
Andrés Pérez M.
Diego Ciongo
Soledad Castagna