Argentina Economic Forecast

Argentina Economic Outlook

April 9, 2019

On 5 April, the IMF unlocked a USD 11.8 billion financing tranche to be disbursed to Argentina on 9 April, part of the revised USD 56.3 billion stand-by agreement reached in October to protect the peso and help revive the economy. The Fund praised the government for outperforming its 2018 primary deficit target but also urged it to further cut spending and adopt pro-growth, market-liberalizing reforms. To strengthen the credibility of the government’s reform agenda, in late March the finance minister proposed a new Central Bank charter which forbids monetary financing of fiscal deficits. This comes amid a still-difficult economic situation: After contracting sharply in Q4, economic activity shrank again in January, while inflation remains stubbornly high. Nonetheless, in February, Argentina posted its sixth consecutive trade surplus and second primary fiscal surplus, which suggest macroeconomic imbalances are gradually healing.

Argentina Economic Growth

The pace of contraction should ease this year, thanks to rising external demand and agricultural production. However, runaway inflation and sky-high interest rates will continue to devour consumer spending and fixed investment, with the latter further hit by political uncertainty ahead of October’s elections. LatinFocus Consensus Forecast analysts see the economy contracting 1.1% in 2019, unchanged from last month’s estimate, and expanding 2.3% in 2020.

Argentina Economy Data

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.
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-
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

Bond Yield6.690.15 %Dec 17
Exchange Rate42.190.45 %Apr 12
Stock Market31,3572.26 %Apr 12

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