Better than expected Q1 GDP does not (yet) override projected stagnation

ARGENTINA - Report 26 May 2023 by Esteban Fernández Medrano

The publication of March's economic activity index (EMAE) allows us to calculate a close proxy of the GDP data that will be officially published on June 22. EMAE´s 1.5% y/y growth, taking the 3-month moving average, suggests a significantly better result for Q1 2023 growth than the -0.7% y/y expected by the market (according to the most recent REM forecasts). We present in this report a brief review of the recent activity data to understand the unexpected result, acknowledging that market attention remains set on monetary, FX, and reserve policies as a response to the rising inflation data (May CPI will be published on Jun 14); Massa's negotiations with the IMF ahead of the USD 2.5bn debt payment obligations (June 21 and 22); and the political decisions ahead of the June 24 deadline to announce the candidates for the primaries.

Finally, we close this report with a review of Cristina Fernandez de Kirchner's speech at the May 25 National Day ceremonies.

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