The skyline in Argentina

Argentina GDP Q1 2020

Argentina: Economy plunges in Q1 amid lockdown and ongoing debt renegotiations

Economic activity in the first quarter slumped 5.4% year-on-year, following Q4’s softer 1.1% drop, according to the Statistical Institute (INDEC). Another sharp contraction in domestic demand was largely behind the economy’s dismal performance, prompted by containment measures to combat the pandemic; fragile investor confidence; runaway inflation; and sky-high interest rates. On a quarter-on-quarter seasonally-adjusted basis, the economy tumbled 4.8% in Q1, following the 0.9% decrease observed in Q4.

Domestic demand sank 8.2% in annual terms in Q1 (Q4: -5.7% year-on-year). Private consumption tumbled 6.6% (Q4: -2.1% yoy) amid an ailing labor market, abysmal consumer confidence, elevated inflation and postponed spending decisions due to the Covid-19 emergency. Moreover, fixed investment collapsed 18.3% (Q4: -8.5% yoy), led by business closures and a significant contraction in investment in construction and machinery equipment, while government consumption fell 0.7% in Q1 (Q4: -1.6% yoy).

The external sector was also battered by the spread of the pandemic. Imports dived 16.0% in Q1 (Q4: -11.4% yoy), again reflecting plummeting domestic demand. Exports, meanwhile, fell 4.7% in Q1 (Q4: +7.6% yoy), weighed down by lockdowns in main trade partners.

Argentina’s ailing economy will contract sharply this year. The pandemic is further hammering domestic and external demand, as well as worsening the country’s troubled fiscal position. Avoiding further financial turmoil and gaining access to external financing sources will hinge on the outcome of ongoing debt renegotiations, which appear on the verge of collapsing.

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