Argentina's industry posts worst drop since beginning of pandemic

Argentina's manufacturing sector posted its worst decline in more than a year in May, reinforcing analysts' view that the economy contracted in the second quarter.

Industrial production fell five percent in seasonally adjusted terms compared to April, for its third drop in the last four months, according to government data released on Wednesday. Construction activity also contracted three percent in May, the fourth consecutive negative reading for the sector.

Argentina's economy likely contracted in the second quarter when the country's worst wave of Covid-19 cases forced President Alberto Fernández to implement a strict nine-day temporary quarantine, which has since been relaxed. A brief ban on beef exports also hurt activity by sparking a farmers' strike, according to economists.

Analysts forecast a 2.3 percent quarterly contraction in the economy for the second quarter, according to the Central Bank's monthly survey. By 2021, Argentina is expected to grow six percent.