The skyline in Argentina

Argentina GDP Q3 2023

Argentina: Activity declines at a more moderate rate in Q3

GDP slid at a softer rate of 0.8% year on year in the third quarter, above the 5.0% contraction logged in the second quarter. On a seasonally adjusted quarter-on-quarter basis, GDP bounced back, increasing 2.7% in Q3, contrasting the previous period’s 2.7% decrease. Q3’s reading marked the best result since Q1 2021.

Private consumption growth fell to an over two-year low of 0.3% in the third quarter (Q2: +0.7% yoy), as runaway inflation and downbeat sentiment weighed on spending. Meanwhile, government consumption growth expanded 1.8% (Q2: +3.3% yoy). That said, fixed investment rebounded, growing 0.8% in Q3, contrasting the 1.6% contraction recorded in the previous quarter, partially thanks to a less challenging base of comparison.

On the external front, exports of goods and services fell 4.8% on an annual basis in the third quarter, still affected by a severe drought, following the second quarter’s 11.2% contraction. Conversely, imports of goods and services growth slowed to 2.6% in Q3 (Q2: +3.1% yoy).

GDP likely continued to contract in Q4, hit by hyperinflation, capital controls, a collapsing peso and skyrocketing interest rates. That said, significant uncertainty surrounds next year’s economic performance due to the wide-ranging reform program advocated by President Milei. The lagged effects of hyperinflation will restrain consumption, but rising exports should cushion the downturn. A shift towards more market-friendly policies is an upside risk in the medium term, but social unrest could delay reforms.

Commenting on the outlook, Itaú Unibanco’s Andrés Pérez and Diego Ciongo stated:

“As a result of better-than-anticipated activity data in 3Q23, our 2023 GDP growth forecast of -3.0% now has an upward bias, that is pointing to a smaller annual contraction in 2023. The contraction in economic activity is likely to continue in 2024 with a decline of 2.5%, despite favorable drought-related base effects, as the ambitious stabilization plan addresses Argentina’s severe macro-financial imbalances.”

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest