Argentina Economic Forecast

Argentina Economic Outlook

January 16, 2018

President Mauricio Macri’s government made important progress in his drive to liberalize the economy. The 2018 budget and a highly controversial tax and pension reform plan were approved by the congress in the final weeks of 2017. The pension and tax reform envisages lowering the government’s elevated public sector spending and making Argentina a more attractive investment destination. It should give a further impetus to the economy, which is on a solid recovery path, as confirmed by the latest data. Economic growth reached 4.2% annually in Q3, a notable acceleration from Q2’s 2.9% expansion and the fastest print in over four years. Despite strong GDP growth, the economy remains under pressure. On 28 December, the Central Bank revised its inflation target for the next two years, as the country missed its 2017 target and tight monetary conditions are stifling economic activity. The announcement caused the peso to depreciate sharply and will likely undermine the Bank’s credibility in anchoring inflation and achieving the government’s fiscal reduction plans.

Argentina Economic Growth

Argentina’s economy is set to accelerate in 2018 and 2019 amid solid growth in private consumption and fixed investment. FocusEconomics panelists see the economy expanding 3.0% in 2018, which is down 0.1 percentage points from last month’s forecast. For 2019, growth is expected to reach 3.2%.

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 Rate17.250.45 %Dec 06
Stock Market26,4702.26 %Dec 06

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