The INDEC national statistics bureau said Wednesday that Argentina’s economy had posted its sharpest quarterly contraction in recent history, though still narrowly beating economists’ forecasts.
Economic activity declined 16.2 percent in the second quarter compared to the first, reflecting the full impact of a nationwide Covid-19 lockdown implemented in late March. Economists had forecast a 16.6 percent quarterly decline.
From a year ago, economic activity dropped 19.1 percent in the quarter, the largest drop since at least 2004. Investment fell nearly 40 percent from a year earlier.
In the six-month comparison, activity fell 12.6 percent, compared to the same period in 2019, INDEC said.
According to INDEC, the sectors with the greatest drops in the second quarter were hotels and restaurants (down 73.4 percent) and social and personal services (down 67.7 percent). Construction (down 52.1 percent), manufacturing (down 20.8 percent), transportation and communication (down 22.5 percent) and commerce (down 16.9 percent) also registered sharp falls.
Argentina’s recession is stretching into its third year now, with double-digit unemployment and inflation over 40 percent. President Alberto Fernández has significantly increased spending to stimulate the economy, despite having no access to credit markets following the nation’s ninth default. Argentina emerged from default earlier in September.
Although activity continues to rebound from its low point in April, Argentina’s outlook remains dire. Economists polled by the Central Bank see a 12 percent economic decline this year, on pace for the worst one-year drop on record. The International Monetary Fund predicts a contraction of 9.9 percent this year. Fernandez’s government recently tightened currency controls and hasn’t spelled out an economic plan yet, though it may be more forthcoming during talks over a new financing programme with the IMF, which are ongoing.