Argentina Economic Forecast

Argentina Economic Outlook

February 12, 2019

The economy appears to have remained stuck in recession in the fourth quarter. This follows a second consecutive GDP contraction in the third quarter, which was triggered by plunging domestic demand on the back of sky-high inflation and interest rates, and a sharp fall of the peso. The decline in economic activity intensified in November, due to faster contractions in most economic sectors, and industrial production shrunk markedly throughout Q4. Turning to the first quarter of this year, January’s drop in consumer confidence points to protracted weakness in spending. At the same time, macroeconomic adjustments continue. The trade balance recorded a fourth consecutive surplus in December thanks to surging exports and plunging imports. Moreover, recently released data shows that the country outperformed its 2.7% primary-deficit-to-GDP ratio which had been outlined as a target by the IMF in 2018, while it also reduced its fiscal deficit from 6.0% of GDP in 2017 to 5.2% of GDP.

Argentina Economic Growth

The economy should gradually begin to recover this year. A slow but steady moderation in both inflation and interest rates should support consumer spending and fixed investment, which will nevertheless suffer from still-tight financing conditions and higher taxes. Growing agricultural production will boost exports and limit the scope of the contraction. Political uncertainty ahead of October’s elections continue to cloud the outlook. LatinFocus Consensus Forecast analysts see the economy contracting 1.0% in 2019, down 0.1 percentage points from last month’s estimate, and expanding 2.5% 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 Rate38.210.45 %Feb 14
Stock Market37,3862.26 %Feb 14

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