Aggregate supply and demand grew 2.6% yoy in 1Q24, above market consensus of 2.2% (as per Bloomberg). At the margin, using seasonally adjusted figures, aggregate supply registered a solid expansion of 1.5% qoq/sa, explained by strong real imports of goods & services (4.1%) which more than offset a weak GDP growth figure of 0.3%. Domestic demand was also solid (1.2% qoq/sa) driven by private consumption (1.5%), while gross fixed investment rose by 0.8%. Resilience in private consumption is likely associated to bringing forward transfers from social programs into 1Q24 from 2Q24 as they were forbidden by law in the electoral period. Finally, exports of goods & services were practically flat sequentially in 1Q24, likely limited by a strong real exchange rate in the period, despite a resilient external demand.
Our take: We expect domestic demand to soften during the 2H24 as fiscal expenditure slows after elections and amid the transition of administrations. We could see some recovery in the manufacturing sector (reflected in exports of goods & services) during the rest of the year supported by the recent weakening of the currency, associated to the uncertainty from the policy direction of the new administration. Our GDP growth forecast for 2024 stands at 2.3%.
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