Argentina Consumer Confidence June 2017


Argentina: Consumer sentiment worsens considerably in June

June 23, 2017

In June, the Universidad Torcuato di Tella (UTDT) consumer confidence index fell from May’s 45.8 to 42.0. The index is now even further below the 50-point threshold that separates pessimistic from optimistic sentiment. Consumer confidence has been negatively affected by the Macri Administration’s reforms, which, in order to fix the numerous imbalances stemming from the previous administration’s economic policies and give the country a more stable policy framework, have resulted in job cuts and a high rate of inflation. Latest available data shows that unemployment rose significantly in Q1 2017. Moreover, the tightening stance the Central Bank is maintaining may have weakened consumer sentiment further, as it signals that authorities are facing difficulties in keeping prices under control.

In June, consumers were far more pessimistic about their current financial situations than they were last month and they were less willing to make major purchases, which doesn’t bode well for private consumption. Moreover, both their assessments of their personal situation compared to one year ago and their outlook regarding their future financial situation deteriorated considerably. In addition, households’ assessments of both the country’s short- and long-term macroeconomic prospects weakened substantially, probably influenced by the slower-than-expected improvement in the economy.

Panelists surveyed for the LatinFocus Consensus Forecast see private consumption rising 2.9% in 2017, which is unchanged from last month’s forecast. For 2018, panelists expect private consumption to increase 3.0%.

Author: Massimo Bassetti, Senior Economist

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