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Argentina GDP Q1 2021

Argentina: GDP records fastest expansion since Q1 2018 in the first quarter

Economic activity bounced back in the first quarter, increasing 2.5% year-on-year and contrasting the 4.3% contraction logged in the fourth quarter of last year. Q1’s reading marked the fastest growth since Q1 2018.

The upturn reflected improvements in private consumption, fixed investment and exports compared to the previous period. Private consumption recorded the smallest drop in over a year in the first quarter, decreasing 0.7% (Q4 2020: -8.6% yoy). Moreover, fixed investment growth picked up to 38.4% in Q1 from 15.8% in the previous quarter, partly thanks to a very low base of comparison but also on the back of investment in construction, transport and machinery and equipment. Government consumption, meanwhile, dropped 0.5% in Q1 (Q4 2020: +0.8% yoy).

On the external front, exports of goods and services rebounded in the first quarter, growing 1.2% year-on-year and marking the best reading since Q4 2018 (Q4 2020: -32.4% yoy). In addition, imports of goods and services also bounced back, growing 18.8% in Q1 (Q4 2020: -2.6% yoy) and marking the best reading since Q4 2017.

On a seasonally-adjusted quarter-on-quarter basis, economic growth moderated to 2.6% in Q1, following the previous quarter’s 4.4% increase.

The economy should recuperate some of last year’s losses in 2021, amid the gradual lifting of restrictions at home and abroad. The recovery will nevertheless be constrained by runaway inflation, capital controls and elevated policy uncertainty. On top of that, cumbersome debt renegotiations with the IMF and pandemic-related risks cloud the outlook.

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