After the first quarter on the rise, there are consultants starting to show signs of alarm on economic activity from this month.

According to a paper released by JP Morgan bank, the bank expects the country’s economy contracts in the second and third quarters of the year.

The entity ensured that the real growth of 1.8% month-on-month registered in February exceeded its expectations and prompted bank analysts to revise their estimate for the first quarter upwards. Now calculate that between January and March the economy grew by 5%.

But that optimism was shattered last month. “A higher inflation and the possible energy restrictions they will prove to be a drag on activity in the second and third trimesters ”, said the work signed by Diego W. Pereira and Lucila Barbeito.

Despite the good data for February, JP Morgan maintained the projection for all 2022 at 3%. This is because they lowered the estimate for the last quarter of the year, decrease of 0.2% year-on-year.

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what is to come

For JP Morgan, rising energy prices, specifically LNG, are likely to cause restrictions affecting production of businesses rather than households, “given the politically sensitive at stake”.

In addition, the bank maintains that the acceleration of inflation observed in recent weeks is likely reduce private sector consumption in the second quarter and perhaps also in the third, “despite the financial measures implemented so far”.

Finally, the drought that affected the volume of agriculture (especially corn and soybeans) in the early part of this year will weaken real growth, mainly between April and June.

These three factors led the bank to change down the second quarter, which will fall to 4.5%, and the third, which will have a decrease of 2%. The last quarter of the year remained at 0.2%.

“Without reforms, we believe the economy will continue to struggle not only to ensure a sustainable growth path in the future, but also to regain the peak of activity in 2017,” the report said. paper.

Sector by sector in February

In February, the report says, the overall activity registered 6.2% higher than the pre-pandemic level in February 2020but still 2.2% below the peak in November 2017.

“Comparing pre-pandemic levels, sectors such as Construction, Trade and Labor expanded by 19.3%, 16.1%and 10.8%, respectively ”.

service sectors, such as Restaurants and Hotels and Transportation they were still below the pre-covid level (-20.7% and -2.4% respectively).

“The recovery after Covid covering the stagnation deepest and longest experience since the sudden cessation of capital flows in April 2018 ”, the entity believes.

With the exception of six sectors (Agriculture, Mining, Real Estate, Public Administration, Education and Health), the activity is lower than pre-pandemic levels.

NEang