Argentina Economic Forecast

Argentina Economic Outlook

January 21, 2020

Economic growth slumped in the third quarter after flatlining in annual terms in the second quarter. Another large contraction in domestic demand and softer support from the external sector were behind the downturn. Available data suggests the economy remained mired in recession in the fourth quarter: Economic activity shrank in October, industrial production fell in the first two months of the quarter, and consumer confidence remained depressed. Meanwhile, on 21 December, Congress approved an emergency bill delivered by the new Peronist government. In an attempt raise fiscal resources while protecting the most vulnerable social groups, the bill hikes several taxes, freezes utility tariffs and gives the government the power to revise pension benefits, while also providing cash for lower pensions. However, its ability to rein in public accounts and put the economy back on track seems doubtful.

Argentina Economic Growth

In 2020, the economy looks set to shrink for a third consecutive year. Although the pace of contraction should ease, still-high inflation and interest rates, coupled with faltering investor confidence, will weigh on investment and spending, while the new levies will hamper export growth. Renegotiations of the country’s public debt and interventionist policies pose downside risks. LatinFocus Consensus sees the economy contracting 1.5% in 2020, which is up 0.3 percentage points from last month’s estimate, before rebounding 1.7% in 2021.

Argentina Economy Data

2014 2015 2016 2017 2018
Population (million)42.242.743.143.644.1
GDP per capita (USD)14,54013,13315,11012,77814,727
GDP (USD bn)614560652557649
Economic Growth (GDP, annual variation in %)2.4-2.52.7-2.12.7
Domestic Demand (annual variation in %)4.0-3.94.2-1.66.0
Consumption (annual variation in %)3.6-4.43.7-0.84.0
Investment (annual variation in %)2.3-6.83.5-5.812.2
Industrial Production (annual variation in %)-0.1-2.50.1-4.52.5
Retail Sales (annual variation in %)26.737.327.326.020.8
Unemployment Rate7.17.37.18.48.4
Fiscal Balance (% of GDP)-1.9-2.4-3.9-5.9-5.9
Public Debt (% of GDP)43.544.752.653.357.1
Money (annual variation in %)25.728.928.230.426.0
Inflation Rate (CPI, annual variation in %, eop)26.638.026.941.024.8
Inflation Rate (CPI, annual variation in %)18.438.026.741.227.7
Inflation (PPI, annual variation in %)0.00.00.0-  -  
Benchmark Interest Rate (%)21.6320.3827.2519.8823.25
Stock Market (annual variation in %)88.959.136.144.977.7
Exchange Rate (vs USD)6.528.4612.9415.8618.60
Exchange Rate (vs USD, aop)5.488.129.2714.7716.56
Current Account (% of GDP)-2.1-1.6-2.7-2.7-4.9
Current Account Balance (USD bn)-13.1-9.2-17.6-15.1-31.6
Trade Balance (USD billion)1.52.7-3.42.1-8.3
Exports (USD billion)76.068.456.857.958.6
Imports (USD billion)74.465.760.255.966.9
Exports (annual variation in %)-5.0-9.9-17.02.01.2
Imports (annual variation in %)9.5-11.7-8.4-7.219.8
International Reserves (USD)30.631.425.639.355.1
External Debt (% of GDP)25.328.325.732.636.1

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Argentina Facts

Value Change Date
Bond Yield6.690.15 %Dec 17
Exchange Rate59.880.45 %Dec 30

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