Economics: Indicators for the first months of 2024 suggest a gradual yet sustained weakening of economic activity
The first months of 2024 have witnessed a gradual but sustained weakening of economic activity that comes on top of other economic challenges, both internal and external, that will be exacerbated during 2025.
On the supply side, the monthly GDP proxy IGAE showed 1.9% yoy average growth for the first two months of the year, down from the 3.4% average of 2023. The slowing so far in 2024 extends to most subsectors, with the most significant impacts seen in manufacturing and in the tertiary sector of leisure, hotel and restaurant services, the same tourism-related branches that rode the post-pandemic “rebound” to serve as one of the growth drivers in 2022 and 2023.
Nor is there a favorable outlook on the demand side. Both retail sales and total private consumption show a clear downward trend as of February, which, in the latter case, reflects the contraction in consumption of goods of domestic origin. Similar behavior is being experienced in investment. Although it still grew at better than 10% yoy, that marks a significant deceleration.
In this context, institutions and analysts have lowered their economic growth estimates for 2024-2025 with respect to the forecasts they offered at the end of last year. We reiterate the 2.3% GDP growth estimate for this year made in December, while downwardly revising our projection for 2025 from 2.6% to 1.7%.
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