Our view: Strong growth in the second quarter, with upward revisions of previous data. The dynamism of the Industry and Services sectors more than compensated for the decline in Agriculture (which is seasonally stronger in Q1). From a demand perspective, the dynamic of Investments growing faster than Consumption is favorable for the inflation outlook. Considering the dynamics of a heated labor market, the data reinforces the positive trend for the Services sector in the coming quarters and provides an upward bias in growth projections for the year.
The GDP for the second quarter of 2024 grew by 1.4% QoQ s.a, above our projections and the market median (0.9%). On a year-over-year basis, the growth was 3.3% (est. 2.7%).
It is important to note that previous quarters underwent upward revisions, with a significant adjustment for the first quarter of 2024, moving from 0.8% to 1.0% QoQ.
Production perspective: The stronger-than-expected GDP result in Q2 2024 primarily reflects the solid performance of the Industry (1.8%), particularly in electricity, gas, and construction activities, alongside the growth in Services (1.0%), reflecting the impacts of rising wages and declining unemployment. The performance of these two sectors offset the decline in Agriculture at the margin (-2.3%).
Expenditure perspective: All three components of demand advanced during the quarter, with a notable increase in Investment (2.0%) and Household Consumption (1.35%), reflecting more favorable labor market conditions and available credit. The continuation of Investment growth outpacing Consumption is more favorable from an inflationary standpoint.
External sector: Compared to Q1 2024, Exports of Goods and Services rose by 1.37%, while Imports grew by 7.64% in the period.
With this result, the statistical carryover for 2024 is 2.5%. Thus, with today’s data favoring a more constructive trajectory for the indicator, our expectation for 2024 is a growth rate of 2.9%.
For more information, please check our GDP 2Q24.
