Economics: Indicators for October and November confirm a more pronounced deceleration likely to extend well into 2025
The seasonally adjusted 0.3% yoy drop in activity the Global Indicator of Economic Activity (IGAE) registered for October marked its first outright contraction since early 2021. The latest result marked an extension of the slowing trend that began in early 2Q 2024. Services continued to decelerate as the restaurant and hotel segment reported its seventh consecutive negative growth rate yoy and is not expected to recover in the coming year.
While the IGAE showed continuing minimal growth in the secondary sector through October, the industrial activity index registered a seasonally adjusted contraction of 0.9% yoy for November, pulled lower by a 4.4% fall in the once booming construction industry due to a more than 30% drop in civil engineering works. The building component, in which private construction plays a greater role, enjoyed a bit of a recovery from a flat October but this component has been very volatile, and a considerable weakening of growth is expected for the fourth quarter average. This weakening reflects an erosion of confidence in investing to expand productive capacity in the country, which has been clearly observed since July 2024 and which deepened at the end of 2024. In the same direction, construction investment figures showed that private construction has weakened significantly since the second quarter.
Based on the latest numbers, we look for continuing weakness in construction, investment and consumption, and for economic growth overall to remain at a mere 0.3% pace in 2025.
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