GDP in Argentina
Argentina - GDP
Economy picks up in final quarter of 2016 but weaknesses persist
Argentina’s economic performance last year was marked by a downturn in household conditions and worsening investment, as efforts by the Macri administration to tackle problems built up over the previous decade prompted inflation to skyrocket and severely curtailed public spending. GDP plunged 2.3% in 2016, in marked contrast to 2015’s 2.6% expansion. The result matched FocusEconomics analysts’ projection for the year. However, preliminary economic data for Q4 released on 21 March suggest that the worst has been left behind, with the contraction in GDP shrinking from a 3.7% decrease in the third quarter to a 2.1% drop in the last quarter of 2016.
Despite the improving data, the domestic sector is still at a crossroads. Declining real wages and buoyant inflation continued to weigh on Argentinian households in Q4, with private consumption dropping 2.1% (Q3: -2.9% year-on-year). Even though one of the mainstays of Macri’s economic reform plan is to reignite investors’ interest in Argentina, a high interest rate environment persists, hurting investment in the country. After decreasing at the fastest pace in eight years in Q3, the decline in fixed investment moderated in Q4 but shrank a still-sizeable 7.7%, with particularly large drops observed in construction and manufacturing investment. Meanwhile, government consumption plummeted more than expected in Q4. As the government focuses on driving down the country’s fiscal deficit, additional cuts were greenlighted towards the end of the fiscal year. Government consumption swung from a 0.9% increase in Q3 to a 2.0% drop in Q4, the largest decline on record.
With the domestic economy still in the doldrums, it came to the external sector to boost overall growth. Supported by a weaker peso and improving regional trade flows, exports soared in the fourth quarter, growing 7.7% (Q3: -1.8% yoy). Due to a smaller increase in imports, the external sector’s contribution to growth improved from minus 0.2 percentage points in Q3 to plus 0.9 percentage points in Q4, the largest contribution in almost two years.
On a sequential basis, the economy grew 0.5% compared to the previous quarter, the second consecutive quarter of growth (Q3: 0.1% quarter-on-quarter). This puts an end to the technical recession and bodes well for Macri’s approval ratings, which have been dropping in recent weeks on the heels of rampant political turmoil and subdued consumer sentiment. The economy is expected to perform better in upcoming quarters and should return to growth in 2017. The improvement will be driven by fading headwinds in the domestic sector as inflation and unemployment rapidly ease, public spending increases ahead of October’s elections and a more benign environment in regional trade flows.
Our panelists expect the economy to grow 2.9% this year, which is down 0.1 percentage points from last month’s forecast. For 2018, panelists expect the economy to expand 3.1%.
Argentina - GDP Data
|Economic Growth (GDP, annual variation in %)||6.0||-1.0||2.4||-2.5||2.6|
5 years of economic forecasts for more than 30 economic indicators.
Argentina GDP Chart
Source: National Statistical Institute (INDEC) and FocusEconomics calculations.
|Bond Yield||6.69||0.15 %||Dec 17|
|Exchange Rate||16.09||-0.02 %||May 24|
|Stock Market||21,685||0.76 %||May 24|
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May 23, 2017
In May, the Universidad Torcuato di Tella (UTDT) consumer confidence index dipped from 46.2 in April to 45.8.
May 23, 2017
In the third month of the year, the monthly indicator for economic activity (EMAE, Estimador Mensual de Actividad Económica) rose 0.8% year-on-year, contrasting February’s 2.1% drop (previously reported: -2.2% yoy), which had marked the lowest reading in four months.
May 23, 2017
In April, exports expanded 1.7% from the same month last year, which followed March’s revised 2.5% increase (previously reported: +2.3 year-on-year).
May 10, 2017
According to the National Statistics Institute (INDEC), consumer prices in the Greater Buenos Aires capital area increased 2.6% in April from the previous month, accelerating from March’s 2.4% and above market expectations of a 2.1% rise.
April 28, 2017
In March, Argentinian industrial production contracted 0.4% over the same month last year, according to the latest data released by the National Statistical Institute (INDEC).