Economy contracted more than expected in March, says INDEC

Argentina's economy contracted more than expected in March as the monthly inflation rate accelerated to its highest level in 20 years.

Economic activity fell 0.7 percent compared to February, below economists' expectations of a 0.3 percent contraction. 

In the year-on-year comparison, the economy expanded 4.8 percent in March, according to data released by the INDEC national statistics bureau on Thursday, accumulating an increase of 6.1 percent in the first quarter from the previous year.

The data means that gross domestic product (GDP) remains on track to grow this year. In 2021, the economy rebounded 10.3 percent in the calendar year, following a sharp 9.9 percent fall in 2020, in large part due to the crippling impact of the Covid-19 pandemic.

The International Monetary Fund (IMF) estimated in its latest annual forecast that Argentina's GDP will increase by four percent this year.

Argentina's inflation rate, on the rise and projected by many experts to clear 65 percent this year, has accelerated amid the global economic impact of Russia’s invasion of Ukraine. 

Accelerating price increases are likely to hurt economic activity, and opinion polls consistently show that inflation is the main concern of consumers.

Argentina’s growth prospects have also dimmed amid growing investor concern that the government will not meet all of its targets in its US$44.5-billion debt restructuring deal agreed with the International Monetary Fund. 

The latest survey carried out by the monetary authority, based on studies from the nation’s largest banks and private consulting firms, was less optimistic, estimating that the economy will register an increase of 3.5 percent in 2022.

Analysts at JPMorgan Chase & Co expect the economy to contract for two quarters this year and local consultancy firm Equilibra projects a recession by 2022.

– TIMES/AFP/BLOOMBERG