Forex - Argentina Preview: due Jun 26 - We Expect April Proxy GDP to Decelerate Its Contraction at -2.1% y/y


 20:20 (GMT) 20 Jun

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Argentina Preview: due Jun 26 - We Expect April Proxy GDP to Decelerate Its Contraction at -2.1% y/y (0101-MBDB-C01)

We expect activity to have improved significantly in April, moderating the contraction from the -6.8% y/y registered in March to -2.1% y/y in April. Though a weaker comparison base provides a boost, we are also forecasting a positive m/m number.

Agricultural production is by far the strongest sector, and it likely continued to grow with the soy harvest in Q2. There is incipient improvement in the rest of the economy as agricultural production starts to spillover to the rest of the sectors. The improvement of manufacturing production from -13.9% y/y in March to -8.8% y/y in April is a reflection of spillovers from agriculture.

Keep in mind that comparison bases turn negative in May. This and the soy harvest make likely that we will have positive y/y figures starting May. That turn should be largely priced by the market. We believe that the key for a long lasting recovery is in the labor market, which by Q1 had not bottomed out.


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