巴黎银行-新兴市场-宏观策略-阿根廷：经济稳定的初步迹象-20190411-8页.pdf

ArKEYArgeshowThis growWe hon tcarryHowDec/Avaiindicprobthe pFiSourEM EFlorenAndrergentinY MESSAentinas high-fwing signs of acompares powth,followed bhave revised othe stronger yover from 201wever,higher i/Dec)could liklable,partiacators for Febrably expandepreliminary nuig.1:Monthly Grces:Indec,Macrobo-7-5-3-11357Feb 17JunIndustFO11 ACONOMICS Our schangaboveGivenOctobExternquestArgenCDS)ArgenMARncia Vazquez,Ecoe Digiacomo,EM/Lna:TenGES frequency,paa moderate grsitively with oby an agricultuour 2019 growQ1 perform18.nterest rates kely hurt growtal industrial ruary suggest ed for a secoumbers for MaGDP,IP,constond,BNP Paribas n 17Oct 17FebMontrial production(RHS)OCUS|EApril 2019 strategy team ge their bearise 905bp,respn the financiaber,the team bnal funding cation the counntina CDS sin.The trade wntinian leg,+42RKET VIEWonomist|BNP PaLatam Strategist|ntative artial indicatoowth in Q1 20ur previous foure-driven bouwth forecast tomance and land inflation(th in the remaand constthat the 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forecegative statisurprise in Q1 2owever,we aecond half of terest rates too be more modig.2:Monthly ces:Indec,Macroboneb-13Feb-14some green shand 5y CDS aobability of 15-inties surrounally in the fronta in 2020-23.Ttrategy teamst a basket ofa P&L of 510lombian leg an stabilirst two monthe first quarterlyrevising our 2%q/q(sa),froxpect a more elated bounceht in 2018,agrecovery.w expect annast-1.5%).Ttical carryove2019 growth.are lowering the year as o last longer.Wdest in Q3 andGDP proxy andnd,BNP Paribas Feb-15FeEMAEPlMhoots,this maare trading at-20%(1y and nding the pret end.The inverted Chad been pof Brazil,Mexic0bp.Of this,nd-4bp on the|FOCsations of the year y expansion siQ1 real GDPom the previovisible expane in agriculturagricultural prodnual real GDPhe revision ster from 2018our quarterlywe expect hWe currently ed flat in Q4.d BNPP growtheb-16Feb-17Growth proxlease refer to impMAR disclosures aay not be eno942bp,1006b2y)and 47.5%esidential elecCDS curve caositioned in loco and Colom+472bp was e Mexican legCUS11/04/19is sufficient toince Q4 2017.P growth forous flat readingnsion in Q2,dal production.duction is poisP to contract tems from a l8 and the poy forecasts foigher inflationexpect GDP gh tracker(%y/yFeb-18Fexyortant informationt the end of this reough tobp and%(5y).ction inalls intoong 5ymbia 5yon the.1 9o seal.recast g of 0%driven After sed to 1.2%ower,ositive or the n and rowth y)eb-19n andeport 2|FOCUS11/04/19Florencia Vazquez,Economist|BNP Paribas Sucursal Buenos AiresAndre Digiacomo,EM/Latam Strategist|Banco BNP Paribas BrasilContraction expected to be smaller in 2019 despite weak H2 The financial crisis that started in May 2018 and the sharp monetary and fiscal adjustments that followed sent the economy into a deep recession.Indeed,real GDP contracted in every single quarter of 2018;the total contraction on a q4/q4 basis stood at 6.5%.Markets have been pondering over when the economy will start showing signs that a bottom has been reached.Partial available data suggests that a bottom was probably reached in Q4 2018 and that real GDP started to grow again(albeit modestly)in Q1 2019(Fig.1).While the official monthly GDP proxy published by INDEC showed an expansion of 0.6%m/m in January,industrial and construction activity reports for February have also shown a monthly,seasonally adjusted advance.This is probably consistent with another monthly real GDP gain in February.Our own proxy*for monthly economic performance suggests that the annual pace of contraction continued to moderate in February(Fig.2).However,the partial data released so far for March have not been as encouraging.Still,the advances of the previous months suggest that the quarter probably saw a modest 0.2%q/q(sa)expansion.If our forecast is correct,this would be the first positive reading since Q4 2017.The consensus,according to the last survey released by BCRA,also looks for a small 0.3%q/q(sa)real GDP gain.The expansion is likely to continue in Q2 2019,when an agriculture-driven bounce is forecast.Indeed,agricultural production contracted 22%in 2018,severely hurt by extremely dry weather conditions.We now expect agricultural output to expand at a vigorous pace of 36%in 2019(Fig.3).The bulk of this positive impact will be seen in Q2,when most of the harvesting is done.We are trimming the annual GDP 2019 forecast to-1.2%(from the previous-1.5%).This revision reflects a smaller negative statistical carryover from 2018 and the upward revision to the Q1 forecast.We also expect a weaker second half of the year,but the positives outweigh the negatives and the net impact for the full year is a small improvement.Beyond the specific impulse from agricultural activity,we do not expect the economy to show a strong recovery.The driver of growth beyond Q2 could be consumption.Indeed,a small,temporary recovery in purchasing power can be expected as most wage negotiations will be finalised by end-Q2.Also,the provincial election calendar suggests public employees are likely to get wage increases in the coming months(see Argentina:Election Tracker for more details).These wage increases(after a visible plunge in 2018,Fig.4)could provide a temporary boost to consumption.However,consumer price inflation has been higher than anticipated in Q1 and is expected to remain high in April.Some relief is expected from May/June onwards but any improvement in real purchasing power is likely to be smaller than originally expected.We are thus trimming our Q3 real GDP forecast and expect a flat performance in Q4(Fig.5).Amid FX market volatility,which is likely to intensify as we approach the August national primaries,interest rates are expected to stay higher for longer.Against this backdrop,we are revising up our year-end policy rate forecast to 45%.Higher rates and financial market volatility are also likely to take a toll on economic activity.Fig.4:Real wages(%y/y,deflated by headline CPI inflation)Sources:Indec,Macrobond,BNP Paribas Fig.3:Agricultural output1(mn tonnes)Fig.5:Real GDP growth and forecasts(%change)Sources:Secretary of Agriculture,Cattle and Fishing,Macrobond,BNP Paribas 1.Includes wheat,soybean,corn and sunflower.Sources:Indec,Macrobond,BNP Paribas-15-10-50510Mar 17Sep 17Mar 18Sep 18Mar 19BNPP estimates020406080100120140707580859095000510152018/19 estimate-20-15-10-505101520Q1 2013Q1 2015Q1 2017Q1 2019%y/y%q/q,saarBNP ParibasforecastsEM ECONOMICS*We estimate monthly economic activity by using a two-step procedure.First,we implement principal component analysis(PCA)to extract a common latent factor from a variety of comprehensive economic activity indicators.Second,we use the common factor to forecast the monthly proxy of GDP by ordinary least squares(OLS).LEGThis purpoobjecrecasis noindepThe ccontaMarkePleasone oSTEEMARKThis ddefinerelatinlawfulrelatecontenSecurThe inthe acpersowhatscontaiThis dpart osubsedocumInformfor thediscusrecipieperforBNPPwhatsof thedocumBNPPyieldstime,sBNPPother 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