Two months of contractionTuesday, July 1, 2014
Economic activity down 0.5% in April
Argentina’s economic activity index (EMAE) fell 0.5 percent in April compared with the same month last year, government data showed yesterday.
Yesterday’s report from the INDEC national statistics bureau included downward corrections for the first two months of the year, with January’s EMAE, which is seen as a close proxy to GDP, dropping from an initially reported 1.3 to one percent and February moving down from 1.3 to 0.9 percent.
Nonetheless, activity went up 0.6 percent in April compared to March.
In the same inter-annual monthly comparison, the economic activity index has thus dropped 0.9 percent in March, risen 0.9 percent in February and increased one percent in January.
Although seemingly resolved through the renewal of a trade pact with Brazil and the unveiling of the Procreauto credit scheme for car purchases, the abrupt and sharp decline of the auto sector both in terms of production, domestic sales and exports was reflected in the contracting EMAEs of March and April.
The auto sector crisis was triggered by a luxury goods tax hike that had a trickle-down effect, starting with significant drops in premium car sales and culminating in temporary suspensions for thousands of workers at plants in Córdoba and Buenos Aires province.
April’s data marked the second consecutive fall in the monthly EMAE economic activity index, which is a close proxy for gross domestic product, with GDP only published on a quarterly basis.
Data released last week showed Argentina’s economy slid into recession in the first three months of the year, marking two consecutive quarters of contraction.
The reading yesterday came in above a median forecast in a Reuters poll of eight economists for activity to have declined one percent.
The EMAE’s base year was updated from 1993 to 2004 this year, but the report of a 4.9 percent growth in activity during 2013 was not corrected, unlike the year’s GDP change, which was adjusted from 4.9 to three percent.