Argentina Economic Forecast

Argentina Economic Outlook

March 17, 2020

The economy most likely contracted again in Q4, as suggested by shriveling economic activity in October-December, following a year-on-year drop in the third quarter. Turning to Q1, a dip in both industrial production and exports in January, coupled with abysmal consumer sentiment in the first two months of the year, hints that the economy remains in the doldrums. Meanwhile, on 10 March, President Alberto Fernández signed a decree authorizing the government to restructure USD 68.8 billion of foreign debt, paving the way for tense negotiations with creditors. This follows a statement released by the IMF on 19 February, which deemed the country’s debt unsustainable and called for a “meaningful contribution from private creditors”. On the fiscal front, in early March, the government raised taxes on soybeans from 30% to 33% to increase revenues ahead of a likely debt restructuring, further straining relations with the agricultural sector.

Argentina Economic Growth

In 2020, the economy looks set to remain stuck in recession, although the pace of contraction should soften. An unfavorable investment environment, high inflation and policy uncertainty will depress domestic demand, while the new levies will weigh on export growth. Interventionist policies, spillovers from Covid-19 and tough debt renegotiations ahead further cloud the outlook. LatinFocus Consensus sees the economy contracting 1.6% in 2020, which is down 0.1 percentage points from last month’s estimate, before rebounding 1.5% in 2021.

Argentina Economy Data

2014 2015 2016 2017 2018
Population (million)42.743.143.644.144.6
GDP per capita (USD)13,13315,11012,77814,38612,123
GDP (USD bn)560652557634540
Economic Growth (GDP, annual variation in %)-2.52.7-2.12.7-2.5
Domestic Demand (annual variation in %)-3.94.2-1.66.0-3.4
Consumption (annual variation in %)-4.43.7-0.84.0-2.4
Investment (annual variation in %)-6.83.5-5.812.2-5.7
Industrial Production (annual variation in %)-2.50.1-4.52.5-4.6
Retail Sales (annual variation in %)37.327.326.020.828.5
Unemployment Rate7.37.18.48.49.2
Fiscal Balance (% of GDP)-2.4-5.1-5.8-5.9-5.0
Public Debt (% of GDP)44.752.653.156.686.0
Money (annual variation in %)28.928.230.426.022.8
Inflation Rate (CPI, annual variation in %, eop)38.026.941.024.847.6
Inflation Rate (CPI, annual variation in %)38.026.741.227.7-  
Inflation (PPI, annual variation in %)0.00.0-  -  -  
Benchmark Interest Rate (%)20.3827.2519.8823.2549.50
Stock Market (annual variation in %)59.136.144.977.70.8
Exchange Rate (vs USD)8.4612.9415.8618.6037.66
Exchange Rate (vs USD, aop)8.129.2714.7716.5628.08
Current Account (% of GDP)-1.6-2.7-2.7-4.9-5.0
Current Account Balance (USD bn)-9.2-17.6-15.1-31.2-27.3
Trade Balance (USD billion)2.7-3.42.1-8.3-3.7
Exports (USD billion)68.456.857.958.661.8
Imports (USD billion)65.760.255.966.965.5
Exports (annual variation in %)-9.9-17.02.01.35.3
Imports (annual variation in %)-11.7-8.4-7.219.8-2.2
International Reserves (USD)31.425.639.355.165.8
External Debt (% of GDP)28.325.732.637.051.4

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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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