Fynsa
Do you remember when we talked a while back about the debate surrounding the activity figures? At that time, we noted that while the year-over-year figures were negative, the growth rate figures showed a positive trend, which was used as an argument to suggest that the worst was over. However, our analysis differed somewhat, particularly due to statistical factors that skewed the numbers.
With the release of the May Imacec figures, things are starting to become clearer. The 2.0% year-over-year decline was the worst of the year (so far), indicating that the weakness in economic activity is very much alive. It’s true that a significant portion of this month’s poor data is due to the volatile performance of the mining sector, but looking at the non-mining Imacec series, the situation isn’t much better.
Looking at the growth rate, we realize that our previous estimate was correct: in May (or June at the latest), this indicator would cease to be positive. The explanation is the same as what drove it to nearly 3% annualized quarter-over-quarter: the extremely strong January figure. When January was part of the moving average under analysis, everything looked wonderful; however, now that it has become the basis for comparison, the picture has changed radically. The -0.6% quarter-over-quarter figure now does little to justify a recovery, especially since the year-over-year change, the seasonally adjusted monthly figure, and the growth rate are all negative.
However, to be fair, we don’t believe that three months ago we were recovering as much as we are now, just as we don’t believe we’re getting any worse. We’re neither better nor worse off—we’re just stuck in a rut. It’s possible that the June data could be even worse than May’s, and that wouldn’t necessarily indicate an underlying deterioration either. The issue here is that it’s hard to find factors that could turn this situation around. The Central Bank’s imminent start to a cycle of rate cuts could serve as such a factor, but monetary policy acts with a lag, and it’s difficult to rely on that to paint a picture of a better second half of the year.
All in all, we believe that expectations will continue to hover at the lower end of the range for 2023 growth, which in our scenario stands at -0.5%. As for 2024, we do not see many other factors beyond countercyclical policies and base-effect benefits, which would lead to GDP growth of only 1.8%
