BUENOS AIRES (Reuters) – Argentina’s economy shrank 1.7% in the second quarter compared to the previous three months, the country’s statistics agency said on Wednesday, extending a recession the South American nation entered early this year.
Year-on-year, Argentina’s gross domestic product (GDP) also dipped 1.7%, landing below analysts’ forecasts of a 1.4% contraction.
This marks the South American economy’s fifth straight annualized quarterly contraction and third quarter-on-quarter decline.
Argentina’s key farming sector led growth, shooting up 81.2% year-on-year, while fishing was up 41.3%. However, construction tumbled 22.2%, manufacturing fell 17.4% and retail activity slid 15.7%, statistics agency INDEC said.
Argentina entered a technical recession – two straight periods of quarter-on-quarter GDP contraction – in the first quarter of this year. It ended 2023 with a 1.6% contraction.
The government of libertarian President Javier Milei, who took office in December, has pushed a tough austerity drive that has battered economic activity and pushed up poverty and unemployment.
The government says the cut-cutting measures are needed to rein in the world’s highest inflation that is hovering above 250%, rebuild its foreign reserves and reverse years of deep fiscal deficits.
While monthly inflation has hovered around the same level since May, Milei’s government on Sunday presented a 2025 draft budget, in which it predicted inflation just above 18% next year, with GDP growing 5% next year and a further 5% in 2026.
(Reporting by Sarah Morland and Hernan Nessi; Editing by Brendan O’Boyle)
Comments