Argentina Economic Outlook
October 9, 2018President Mauricio Macri’s government and the IMF reached a new agreement on 26 September which provides further financial support and will most likely shield the country from any credit distress this year and next. The revised standby agreement (SBA), however, comes with conditions, most importantly including: a primary budgetary balance by 2019—one year earlier than stipulated in June’s SBA—and a strict monetary base rule to curb inflation. The latest fiscal data shows that, although the primary deficit narrowed by almost a third in January–August, interest payments surged. The SBA came after national accounts data showed that GDP shrunk dramatically in Q2, reflecting contractions in both domestic and external demand, compounded by the effects of a severe drought. That said, data on economic activity in July, without changing the broad picture, suggests some improvement, given that the pace of year-on-year contraction softened considerably in the month. However, other indicators point to prolonged economic weakness as demonstrated by consumer confidence, which continued to plunge in September, and the trade deficit, which widened further in August.
Argentina Economic GrowthThere is a great deal of uncertainty surrounding the performance of the Argentine economy in 2019. Not only will it depend on the success of the fiscal deficit and inflation reduction program agreed with the IMF; its fate also rests on the subsequent restoration of investor confidence and on achieving more solid macro fundamentals. That said, the contraction of the economy should ease significantly, thanks to growing agricultural output and increasing external demand, while domestic demand should remain weak due to high interest rates. LatinFocus Consensus Forecast analysts see the economy contracting 2.0% this year and a much softer 0.1% in 2019, down 0.8 percentage points from last month’s estimate.
Argentina Economy Data
5 years of Argentina economic forecasts for more than 30 economic indicators.
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|Bond Yield||6.69||0.15 %||Dec 17|
|Exchange Rate||36.60||0.45 %||Oct 11|
|Stock Market||29,598||2.26 %||Oct 12|
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Argentina Economic News
October 5, 2018
On 26 September, the IMF announced a revamped and upgraded financing agreement to crisis-stricken Argentina, giving President Mauricio Macri’s government an economic lifeline until next year’s general election.
October 4, 2018
Industrial production contracted 5.6% in August over the same month of last year, according to data released by the National Statistical Institute (INDEC) on 4 October, which was marginally less than July’s 5.7% year-on-year decline. August’s reading reflected contractions in almost all components of the index.
September 28, 2018
The Universidad Torcuato di Tella (UTDT) consumer confidence index fell to 33.7 points in September from 36.3 points in August, marking the worst reading since February 2014.
September 27, 2018
Exports contracted 1.4% in year-on-year terms in August, contrasting July’s revised 1.8% expansion (previously reported: +1.7% year-on-year).
September 27, 2018
The monthly indicator for economic activity (EMAE, Estimador Mensual de Actividad Económica) contracted 2.7% in annual terms in July, a much softer drop than the revised 6.8% fall recorded in June (previously reported: -6.7% year-on-year).