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Robust
pace sustained
In August, the monthly indicator of economic activity (EMAE, Estimador
Mensual de Actividad Económica) rose 8.8% over the same month last year.
This was up from the 6.6% increase observed the prior month. A
month-on-month comparison confirms the healthy growth trend, as activity
rose 0.94% over July in seasonally adjusted terms (July: +0.86%).
As a result of the strong August reading, the annual variation in the
moving quarterly average rose from 6.9% in July to 7.9% in August,
reversing the declining growth trend observed since March of this year.
Economic
activity remains strong with growth slowing only moderately
More recent data indicate that the strong growth in economic activity
persisted through the end of the third quarter. According to the
National Statistical Institute (INDEC), supermarket sales rose 12.5% in
September over the same month last year. The September reading
almost doubled the 6.6% growth registered in the prior month. As a
result, the annual variation in the moving quarterly average rose from
9.7% in August to 11.0% in September. Furthermore, industrial
output rose 10.4% in September, which was virtually unchanged from the
10.5% expansion registered in the prior month. With the exception
of the tobacco and base metals industries, growth was very strong in all
sub-sectors. In particular, motor vehicle and non-metallic mineral
output boomed with 54.0% and 16.3% respectively over the same period
last year. Finally, construction activity also continued to
flourish, as growth reach 14.8% in September over the same period last
year, which was down moderately from the 16.6% expansion observed the
prior month. Growth was strongest in road and oil-related
construction projects.
Outlook
upgraded amid resilient economic growth
The trend to more moderate growth from earlier unsustainably high levels
seems to be drawing to an end, as growth is stabilizing on a high level
and the pace of economic activity is expected to remain healthy through
the end of the year. Consensus Forecast participants anticipate
that gross domestic product (GDP) grew 7.1% in the third quarter over
the same quarter last year. If confirmed, the third quarter
reading is a notch above the 7.0% expansion observed the prior quarter.
Activity will decelerate in the final quarter to a 5.1% annual pace.
Nevertheless, the growth rate for this year is seen as reaching a robust
7.1%, which is 0.1 percentage points above last month’s Consensus
Forecast figure and just above the government’s new estimate of 7.0% (revised
upward on 21 October from 6.5%). Next year, the moderation in
economic growth is likely to persist, as Consensus Forecast panellists
anticipate the pace to slow to 4.3%, which is 0.4 percentage points
above last month’s estimate.
Consumer
prices on modest upward trend
In October, consumer prices rose 0.39%, which was well below market
expectations of 0.62% and the prior month reading of 0.63%.
Clothing, entertainment and education were the key price drivers in
October. As a result of the October reading, the annual inflation
rate dropped again from 5.9% in September to 5.7%. At the current
level, the annual inflation rate remains below the Central Bank’s
target range of 7% to 11% underlying this year’s monetary programming.
Nevertheless, high economic growth and some currency depreciation are
likely to exert upward pressure on prices through the end of the year,
as the Consensus Forecast sees annual inflation rising to 6.6%, which is
down 0.2 percentage points from last month’s Consensus Forecast.
Next year, inflation is anticipated to rise to 7.5%, amid accelerated
currency depreciation. The current Consensus Forecast figure is
below the government budgeted inflation figure of 7.9% and remains
within the Central Bank’s target range of 5% to 8% set for next year. |
