Argentina’s economic activity decreased by 1.6% in 2023in contrast to 2022’s 5% growth, and faces predictions of worsening decline this year, amid a severe fiscal and monetary adjustment.
As reported this Thursday by National Institute of Statistics and Censuses (Indec)the monthly economic activity estimator (EMAE), which serves as a provisional advance to measure the quarterly change in gross domestic product (GDP), in December it decreased by 3.1% compared to November last.
The indicator also recorded in the last month of 2023 at drop on an annual basis of 4.5%.
Official data reveal that, of the 16 activities included in the indicator, five production sectors recorded year-on-year declines last December, including the financial intermediation (banks, -12.2%), manufacturing industry (-11.9%) and trade (-8.5%).
On the contrary, in the last month of last year the improvements on an annual basis in fishing (8.8%) and agricultural activity (8.1%) stood out, after the severe drought that hit Argentina from the end of 2022 and for much of 2023.
In 2023, the production sectors also had to face a scenario of strong financial tensions devaluation of the Argentine peso, increase in the cost of credit, difficulties for imports of production factors and capital goods and to cancel foreign debts, increasing costs and reducing consumption.
Conditions worsened in the last quarter of 2023, in the midst of the strong uncertainty triggered by the electoral process which culminated with the accession of Javier Milei to the presidency, to apply a fiscal “shock” plan and profound reforms of the system deregulation of the economy.
The strong fiscal adjustment in January, added to the inflationary surge in December (25.5% monthly) and January (20.6%), is already having full impact on variables such as consumption and, in fact, forecasts on economic activity in the 2024 is not good.
Economic forecasts 2024
Meanwhile him International Monetary Fund (IMF) he plans it Argentina’s GDP will contract by 2.8% this yearprivate economists consulted monthly by the Central Bank (BCRA) for its expectations report predict a decline of 3%.
Although private consultants generally see a recovery in the agricultural sector, one of the engines of the Argentine economy, this would not compensate for the decline in other activities affected by the collapse in consumption due to the sharp deterioration in the purchasing power of families.
“The inflationary shock resulting in a sharp decline in purchasing power, the strong fiscal adjustment committed by the authorities and the lack of a clear horizon for investments influence future dynamics,” the company commented in a report. Capital Foundationwhich forecasts a 4.3% drop in GDP this year.
According to the Capital Foundation, at the beginning of the year “the process of stagflation deepened” and “the challenge of the new government in this area is to restart the engines of the economy and generate a long-term horizon that allows us to see the light.” at the end of the tunnel.”
Source: Clarin
