Argentina Economic Forecast

Argentina Economic Outlook

August 8, 2017

Hard data for Q2 suggests that the recovery is finally gathering pace. Economic activity recorded its best performance in a year and a half in May, and in June industrial production jumped on the back of a broad-based expansion, with the food, automotive and metallurgic sectors leading the way. Adding to the good news, the country posted a primary fiscal deficit of 1.5% of GDP in the first half of 2017, significantly smaller than the government target of 2.0%. On the downside, exports fell in June, dragged down mainly by declining demand from China, India and Venezuela, and in July consumer sentiment remained downbeat, largely due to perceived uncertain short-term economic prospects for the country. In the second half of July, the peso saw some weakness against the U.S. dollar. Investors hedged portfolios with dollar-denominated assets as they grew more concerned about the possible outcome of this October’s parliamentary elections, following surveys suggesting that former-President Cristina Kirchner could secure a Senate seat. This prompted the Central Bank to intervene in the FX market by selling dollars, which put an end to the slide.

Argentina Economy Data

20122013201420152016
Population (million)41.742.242.743.143.6
GDP per capita (USD)13,88514,54013,13314,85412,507
GDP (USD bn)579614560641545
Economic Growth (GDP, annual variation in %)-1.02.4-2.52.6-2.2
Domestic Demand (annual variation in %)-1.34.0-3.94.0-0.7
Consumption (annual variation in %)1.13.6-4.43.5-1.4
Investment (annual variation in %)-7.12.3-6.83.8-5.1
Industrial Production (annual variation in %)-7.80.0-1.8-  -4.6
Retail Sales (annual variation in %)26.326.737.327.326.2
Unemployment Rate7.27.17.37.18.4
Fiscal Balance (% of GDP)-2.1-1.9-2.4-3.9-5.9
Public Debt (% of GDP)34.133.039.653.554.2
Money (annual variation in %)38.425.728.928.230.4
Inflation Rate (CPI, annual variation in %, eop)10.826.638.026.941.0
Inflation Rate (CPI, annual variation in %)10.018.438.026.741.2
Inflation (PPI, annual variation in %)13.114.828.3-  -  
Benchmark Interest Rate (%)12.4217.7519.6127.5618.17
Stock Market (annual variation in %)15.988.959.136.144.9
Exchange Rate (vs USD)4.926.528.4612.9415.86
Exchange Rate (vs USD, aop)4.555.488.129.2714.77
Current Account (% of GDP)-0.4-2.1-1.6-2.6-2.8
Current Account Balance (USD bn)-2.3-13.0-8.9-16.8-15.0
Trade Balance (USD billion)12.01.53.2-3.02.1
Exports (USD billion)80.076.068.456.857.7
Imports (USD billion)68.074.465.259.855.6
Exports (annual variation in %)-3.6-5.0-9.9-17.01.7
Imports (annual variation in %)-8.19.5-12.4-8.4-6.9
International Reserves (USD)43.330.631.425.638.8
External Debt (% of GDP)28.025.929.026.635.3

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Argentina Facts

ValueChangeDate
Bond Yield6.690.15 %Dec 17
Exchange Rate17.350.83 %Aug 17
Stock Market22,724-0.71 %Aug 17

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Argentina Economic Growth

August 8, 2017

Thanks to the reforms adopted by the Macri administration, the economy will rebound this year. Fixed investment will recover owing to an improved business environment and higher public infrastructure spending, while household spending should benefit from declining inflation and rising wages. Analysts foresee the economy expanding 2.6% this year, unchanged from last month’s forecast, and 2.7% in 2018.

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