Fynsa
For several months now, we have been predicting that the economy would enter a recessionary cycle. Despite the positive data we received during the first half of the year (and perhaps a little longer), we knew that this good news concealed a significant slowdown that was being masked by certain statistical effects. In this context, our projections indicated that this cycle would begin in August, which, as we mentioned at the time, did not happen. However, that did not prevent September from beginning with a string of negative variations.
The Central Bank announced that September's Imacec contracted by 0.4% compared to the same month last year, which was above our expectations (-1.7% y/y) and those of the market (-1.1% y/y). This is a significant surprise, given that, although we expected a negative variation, it was much lower than estimated. However, the economy entered into contractionary territory, a situation not seen since February of last year. This was explained by growth of 0.2% m/m, the second consecutive month of growth, which was probably the most surprising aspect of this report. Pending the publication of the National Accounts, preliminary GDP is estimated to have increased by 0.2% y/y during the third quarter of 2022.
In disaggregated terms, the mining Imacec fell 0.1% y/y, explained by a minimal seasonally adjusted increase of 0.1% m/m. Meanwhile, the non-mining component fell 0.2% y/y, mainly affected by the contraction in Trade (-10.2% y/y) and Industry (-4.4% y/y). In contrast, Services increased 2.9% y/y, which again can be explained by Personal Services, specifically those related to education. As in the previous month, we seem to be a little lost with this, especially given that there has been a complete (or at least similar) normalization of face-to-face classes in educational establishments. In any case, due to its nature, this would be a temporary component. Eventually, we will compare apples with apples, and this, apparently the last pandemic effect (knock on wood), will disappear, and the most important sectors will be the ones that dictate the behavior of the overall index.
As mentioned in the opening paragraph, we continue to believe that September would have been only the first of many months showing negative growth. Specifically, for October, we estimate that activity would have contracted by around 1.0% y/y. For the year, we are placing an upward bias on our projection of 1.7%.
