After a first quarter with growth, the economy contracted in April, as reflected in the EMAE that he INDEC released last week. In the fourth month of the year it was felt strong impact of droughtwhich dragged down activity levels in the agricultural sector.
In any case, other branches exhibited growth in April, such as mining and hydrocarbons, industry, construction and trade. However, many of these activities could begin to exhibit -also- the effects of the drought.
This is how a consultancy work described it ecolatinin which he announced that in the next reports that measure the levels of activity, a certain stagnation in the industry and construction sectors, as well as less dynamism in consumption.
“April was the first month in which the economy began to feel more severely the direct impact of the drought on the coarse crop (soybeans, corn). We estimate that in the remainder of the second quarter these effects will be transferred to the rest of the economythe indirect negative impacts gaining more strength, which will lead to a greater proportion of sectors possibly exhibiting falls in this period”, they highlighted from the firm.
And they detailed: “Industry, Construction and Commerce, which remained in positive territory in April, will possibly weaken further from May. In this sense, the effectssecond round‘ of the drought will continue to have a greater impact on some industrial branches (such as food and beverages or agricultural machinery), while the weakening of domestic demand due to the acceleration of inflation and the deterioration of real income will impact retail trade ”.
Regarding construction, from Ecolatina they pointed out that, in a context of “limited prospects for public works in the context of a real adjustment in spending, an economy with strong uncertainty as a result of the drought and the election year (wait & see effect) and a fall in the importation of machinery as a result of the restrictions, will make productive investment maintain a negative performance in the remainder of the year”.
On the contrary, other sectors would show a better performance, such as “Mines and quarries and some industrial branches (automotive, cement, pharmaceuticals, oil refining)”, which will prevent “a greater decline in the economy”.
Indicators
In this context, this Thursday the INDEC will release data on Industry and construction activity in May. And, according to private estimates, signs of cooling activity could be seen in these branches.
“After the growth observed in April (+1.2% se), We estimate that the industry will exhibit a moderate drop, affected by the restrictions on imports that operate due to the scarcity of foreign currency.. The leading Indicators of the Automotive Industry and Oil Refining reflected a monthly fall of 6% and 2%, respectively”, they analyzed from LCG.
For its part, the industrial production indicator prepared by the Orlando Ferreres consultancy showed contractions both when compared to May of last year (-1.9%) and last month in the measurement without seasonality (-0.9%). “In detail, the different sectors of the industry show a heterogeneous behavior, with items such as the automotive sector recording double-digit expansions at one end (although showing a slowdown compared to previous months), and the oil industry producing 20% less than last year in the other”, they detailed.
“In the middle, the items linked to construction seem to show stagnation, with production levels similar to those of last year. In the aggregate index, the trend begins to be negative. Going forward we do not see signs that allow us to forecast a change in this trend, in an increasingly challenging and unstable economic context,” they explained from Ferreres.
Meanwhile, when analyzing the evolution of the construction activity, from LCG they pointed out: “The Construya index marked a monthly growth of 1%. For their part, cement shipments reflected a 4% rise in May. With this as a base, we expect activity to maintain the growth path seen in April, reflecting a rise of close to 1% per month in May (-1% per year).”.
Source: Ambito
