The economic activity of Argentina accumulated a drop of 3.6% in the first two months of the year, with a good part of the sectors hit by the drastic drop in demand for goods and services, amid high inflation and a severe fiscal adjustment.
As reported this Tuesday by the National Institute of Statistics and Censuses (Indec)the estimator of economic activity, an indicator that serves as a provisional advance to measure the quarterly variation of the gross domestic product (GDP), registered a contraction of 0.2% last February compared to last January.
The decline shows some moderation with respect to the 2.8% collapse that occurred in the last month of 2023 and the 0.8% drop noted last January, but, even so, it confirms the deterioration of the economic activity of Argentina, which since September of last year has exhibited negative monthly indicators.
The official report also reveals that in February economic activity fell 3.2% compared to the same month in 2023, thus chaining four months of year-on-year declines.
According to Indec, in the first two months of the year, Argentine economic activity accumulated a drop of 3.6%.
According to the official report, of the 16 divisions included in the measurement, eight productive sectors recorded year-on-year declines last February, highlighting some with strong weight, such as construction (-19.1%), financial services (-12.1% ), the manufacturing industry (-8.4%a) and commerce (-5.5%).
Mining is spared from the falls, with an improvement of 11.7%; fishing, which jumped 31.6%; and agriculture, which advanced 5.5%, but from a comparison base that was very negatively affected by the severe drought that Argentina suffered last year.
In the first two months of the year, the various economic sectors of Argentina operated in a scenario of high inflation (276.2% year-on-year in February) and a sharp drop in demand due to the collapse in consumption, in the midst of the drastic fiscal adjustment implemented. by the Argentine president, Javier Milei, who took office in December 2023.
“The abrupt fall in real income had a direct impact on consumption,” the consulting firm LCG noted in a report.
According to data from the Argentine Chamber of Commerce and Services, in the first quarter of the year consumption accumulated a drop of 3.1%.
The private economists consulted monthly by the Argentine Central Bank for its expectations report project that in 2024 the Argentine economy will contract by 3.5%.
«For the next few months we hope that the current trend will be maintained and towards the middle of the year we could begin to see some improvement in the depressed sectors, if the macroeconomic order that the Government is trying to apply is successful and the income of the communities begins to recover. families and consumption»said the consulting firm Orlando Ferreres & Asociados.
Along the same lines, LCG does not expect an “accelerated recovery” since there are no factors to drive such a phenomenon.
Rather, the consulting firm points out, “in a stabilization scenario, with inflation converging to lower levels, we can expect that the very marginal recovery of wages may allow the negative trajectory to be reversed, that is, to stop falling.”
«Focused on the convergence of accounts, the public sector will continue not to be an engine of growth. And the impact of the investment, if it materializes, would come later, with the more consolidated progress of the reforms proposed by the Government, a recovery in consumption or a more depreciated exchange rate.LCG added. EFE (I)
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