Argentina: Economy accelerates in Q4; growth mild in FY 2014
March 23, 2015
In Q4 of last year, GDP expanded 0.4% over the same quarter of the previous year, according to data released by the National Statistics Institute (INDEC) on 20 March. The print came in slightly above the 0.3% increase that the markets had expected and marked an improvement over Q3’s revised flat reading (previously estimated: -0.8% year-on-year). In the full year 2014, the economy grew 0.5%, which marked a slowdown compared to the 2.9% expansion tallied in 2013.
A congressional committee that publishes its own GDP and inflation estimates—amid persistent fears over manipulation of statistics from Argentina’s Statistical Institute—estimated much lower growth figures both for Q4 and full year 2014. According to the committee, GDP contracted 2.6% over the same quarter of the previous year, while posting a 2.0% contraction in the entire year.
The expansion recorded by INDEC in Q4 was mainly the result of an improvement in export performance, since domestic demand deteriorated sharply on the back of a pronounced contraction both in investment and private consumption. Household consumption hit a record low, decreasing 1.2% in Q4 (Q3: -0.5% yoy), whereas fixed investment tumbled from a 4.9% decline in Q3 to a 9.7% drop in Q4. Public spending accelerated to a 3.8% increase in Q4 (Q3: +1.6% yoy), thus partially offsetting the decreases in the other domestic sub-components.
On the external side of the economy, exports of goods and services contracted 1.9% in annual terms in Q4, which was a much less pronounced contraction that the 8.6% fall tallied in Q3. Imports fell 19.1%, which was below the strong 15.6% contraction registered in Q3. As a result of the relative improvement in exports and the sharp drop in imports, the contribution from the external sector to overall growth rose from plus 2.1 percentage points in Q3 to plus 3.7 percentage points in Q4.
According to sequential data, the economy posted zero growth in Q4 in seasonally-adjusted terms, which was slightly down from the revised 0.1% increase tallied in Q3 (previously estimated: -0.5% quarter-on-quarter). Hence, according to revised official data, the economy did not contract in Q3 and with the growth posted in Q4, it was far from entering into a technical recession.
Author: Cecilia Simkievich, Economist