January 21, 2018

EMAE signals economy back to December 2015 levels

Friday, July 28, 2017

Economic activity hits third consecutive month of growth

The country’s figure for economic activity (EMAE) in May of this year came in at 3.3 percent greater than in May 2016, marking a third consecutive month of year-on-year growth.

The figures, released by the INDEC statistics bureau this week, suggested that the level of economic activity is now higher than that in December 2015 — when the Mauricio Macri administration was sworn-in — for the first time. As such, the increase in economic activity was the highest in 18 months. The economy has seen a mix of negative and positive growth during the Macri government but has now posted stronger figures, with 13 of 16 sectors surveyed showing positive year-on-year figures in the most recent release.

According to the INDEC the EMAE, a good proxy for gross domestic product (GDP), was up 0.6 percent in May in comparison to April 2017. In January of this year the EMAE was flat compared to December 2016, with subsequent figures of -1.3 percent, 1.4 percent. -0.2 percent and the 0.6 percent in May.

Thus far in 2017 the EMAE is up a cumulative one percent compared to last year. Throughout 2016, the EMAE was down 2.2 percent on 2015 and the GDP shrank by 2.3 percent.

The best performing sector in May was fisheries, which saw its output up by 38.5 percent. Construction was up by 9.3 percent, in keeping with the 7.8 percent increase in March and 8.1 percent that reported for April. The construction sector had a terrible 2016, with dramatic reduction in economic activity and construction jobs. Agriculture, which weighs heavily on the overall economic activity, saw an increase of 3.3 percent in May compared to last year, with wholesale and retail activity up 4.5 percent. Manufacturing increased by 2.6 percent, posting positive growth for the second time in 2017 after a a 2016 in which it shrank in every month.

Community services, utilities (electricity, natural gas and water) and mining were the only sectors to see economic activity decline.

In addition, the International Monetary Fund (IMF) has increased it’s GDP growth prediction for Argentina in 2017 to 2.4 percent, up from the 2.2 percent projected in April, and to 2.25 percent in 2018. Alejandro Werner, director of the Western Hemisphere Department at the IMF, wrote that the 2018 projection was based on “greater fiscal consolidation and continued tight monetary policy will be a drag on domestic demand. The recent depreciation of the peso has helped correct the overvaluation of the currency and, together with an improvement of demand from Brazil, should support export growth. In addition to further reducing fiscal imbalances and steadily bringing down inflation, stronger, sustained, and more equitable growth will also require further efforts to advance the ambitious supply-side reform agenda.”

Brazilian GDP growth was also revised to 0.3 percent from 0.2 percent. Overall Latin America has been projected to grow by one percent in 2017 and 1.9 percent in 2018.

Meanwhile, Treasury Minister Nicolás Dujovne has predicted that Argentine GDP growth in 2017 will be above three percent.

Separately, Argentina registered a trade deficit of US$748 million in June according to INDEC figures. Exports hit US$5.2 billion, while imports reached US$5.9 billion in June 2017.

Exports were down 2.6 percent compared to May 2017 (equivalent to a reduction of US$135 million, with prices down 0.7 percent and volume down 1.9 percent), with reductions in exports of fuel and energy of 44.1 percent, agricultural manufacturing products down 8.8 percent and primary goods down 3.6 percent. Industrial exports were up by 12.4 percent, and in comparison to May 2017 exports were down 4.4 percent. Imports were up by 15.4 percent (prices increased by 5.8 percent and volume by nine percent) compared to June 2017. Inputs for capital goods increased 32 percent, cars 25.6 percent and intermediate goods were up by 18.1 percent. Imports were down 3.9 percent in comparison to May 2017.

After six months, the trade deficit in 2017 is US$2.613 billion. In June 2016, Argentina had a cumulative trade surplus of US$690 million.

— Herald staff

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