Argentina's economy shrank in second quarter amid worst Covid wave

Argentina’s economy contracted in the second quarter as the country’s worst wave of the pandemic reduced activity and government trade restrictions cooled relations with the private sector. 

Gross domestic product fell 1.4 percent in the second quarter of 2021 compared to the previous period, compared with economists’ expectations of a 1.6 percent decline. From a year ago, GDP rose 17.9 percent as a result of the base effect from the beginning of the pandemic in Argentina, according to government data published by the INDEC national statistics bureau on Tuesday. 

Consumer spending and exports expanded during the quarter, while imports and capital investment weighed down output. A surge in Covid-19 cases from April to June forced President Alberto Fernández to return to a strict lockdown and halt some activities. Elevated inflation, an erratic policy mix and a temporary full ban on beef exports undercut the business climate too. 

The economy’s slump comes as Fernández’s government is trying to resurrect its election odds ahead of a general midterm vote November 14. His ruling coalition lost the September 12 primary elections, exposing tensions within his coalition and forcing him to overhaul his Cabinet last week.

On Tuesday, his administration announced borders would gradually reopen to tourists starting in October, while Argentines don’t need to wear facemasks outdoors anymore. 

After three years of recession, economists expect Argentina’s economy to grow 7.2 percent this year, according to the Central Bank’s monthly survey.