Economy shrank 7.5% in November, reports INDEC

Argentina’s economy suffered its worst shrinkage yet of the Mauricio Macri presidency in November, the INDEC state statistics bureau announced on Thursday.

Gross domestic product contracted 7.5 percent compared to the same month in 2017, the bureau confirmed via its Monthly Economic Activity Estimator (EMAE).

It was the fourth month in a row that the economy dwindled following falls of 4.2 percent in October and 6.1 percent in September. For the period January to November 2018, the economy shrank 2.2 percent compared to 2017.

On Wednesday, at the World Economic Forum in Davos, Economy Minister Nicolás Dujovne had said that he expected GDP to fall by around two percent for last year. The International Monetary Fund’s most recent forecast predicted a contraction of 2.6 percent, with the economy shrinking another 1.7 percent this year.

RECESSION

Argentina entered recession in December after INDEC revealed that the economy had shrunk during the third quarter of 2018, the second quarter in a row it had done so.

Eight successive months of economic decline mark the worst recession since 2008-2009 when Argentina was part of a global meltdown.

The worst-hit sectors were commerce (-17 percent), industrial manufacturing (-12.6 percent) and construction (-11.4 percent). Transport and communications fell by 4.9 percent. In contrast, at least two sectors grew – agriculture by one percent and the utilities (gas, electricity, etc.) by 0.7 percent.

This bad news from 2018 comes on top of runs on the currency causing the peso to lose half its value against the dollar and a final official inflation figure for the year of 47.6 percent in a crisis prompting Argentina to turn to the IMF for a US$56-billion package.

This crisis not only doomed the positive expectations in the first quarter of 2018 for the rest of that year but for this year as well.

But the November figure was not so catastrophic when measured against the preceding month – here the fall was 2.3 percent. It should also be pointed out that the previous November serving as the basis of comparison was towards the end of the one year of positive growth of the Macri presidency with confidence further boosted by the recent midterm victory.