Argentina Economic Forecast

Argentina Economic Outlook

December 4, 2018

The Argentine economy is expected to have remained in recession in the third quarter, battered by the turmoil in financial markets and a sharp depreciation of the peso. In the fourth quarter, economic weakness likely persisted although macroeconomic rebalancing continued: Consumer confidence was deep in negative territory in October-November, while the trade balance recorded the second consecutive surplus in October. The delicate economic situation, coupled with rising debt levels, prompted Fitch Ratings to change the country’s outlook from stable to negative, and S&P to lower its rating from B+ to B in the first half of November. Against this backdrop, the Senate approved an austerity budget in mid-November, paving the way for the approval of the second IMF review of the country a few days later which will allow the disbursement of USD 7.6 billion by the end of the year. Moreover, the primary deficit narrowed considerably in January–October, although the overall fiscal deficit widened in the same period due to surging interest payments.

Argentina Economic Growth

The economy will likely remain stuck in recession next year, although the contraction should soften. Strong, albeit moderating, inflationary pressures and rising taxes will eat into consumers’ pockets, while high interest rates and shrinking public investment will weigh on fixed investment. That said, the trade balance is set to swing from deficit to surplus, thanks to higher agricultural exports and lower imports, while the fiscal deficit ought to narrow. Downside risks stem from possible capital flight following the Fed’s tightening cycle and the uncertain political outcome in next year’s elections. LatinFocus Consensus Forecast analysts see the economy contracting 0.9% in 2019, down 0.4 percentage points from last month’s estimate, before rebounding to 2.7% growth in 2020.

Argentina Economy Data

20132014201520162017
Population (million)42.242.743.143.644.1
GDP per capita (USD)14,51113,13315,11112,50714,609
GDP (USD bn)614560652554644
Economic Growth (GDP, annual variation in %)2.4-2.52.7-1.82.9
Domestic Demand (annual variation in %)4.0-3.94.2-1.36.3
Consumption (annual variation in %)3.6-4.43.7-1.03.6
Investment (annual variation in %)2.3-6.83.5-4.911.3
Industrial Production (annual variation in %)0.0-1.80.4-4.61.8
Retail Sales (annual variation in %)26.737.327.326.220.8
Unemployment Rate7.17.37.18.48.4
Fiscal Balance (% of GDP)-1.9-2.4-3.9-5.9-6.0
Public Debt (% of GDP)43.544.752.653.357.1
Money (annual variation in %)25.728.928.230.426.0
Inflation Rate (CPI, annual variation in %, eop)26.638.026.941.026.1
Inflation Rate (CPI, annual variation in %)18.438.026.741.227.7
Inflation (PPI, annual variation in %)14.828.3-  -  -  
Benchmark Interest Rate (%)21.6320.3827.2519.8823.25
Stock Market (annual variation in %)88.959.136.144.977.7
Exchange Rate (vs USD)6.528.4612.9415.8618.60
Exchange Rate (vs USD, aop)32.6329.8352.8522.6017.30
Current Account (% of GDP)-2.1-1.6-2.6-2.7-4.8
Current Account Balance (USD bn)-13.0-8.9-16.8-15.0-30.8
Trade Balance (USD billion)1.53.2-3.02.1-8.5
Exports (USD billion)76.068.456.857.758.4
Imports (USD billion)74.465.259.855.666.9
Exports (annual variation in %)-5.0-9.9-17.01.71.2
Imports (annual variation in %)9.5-12.4-8.4-6.920.3
International Reserves (USD)30.631.425.638.855.1
External Debt (% of GDP)25.929.026.134.736.2

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Argentina Facts

ValueChangeDate
Bond Yield6.690.15 %Dec 17
Exchange Rate38.160.45 %Dec 14
Stock Market31,1192.26 %Dec 14

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