Economic activity slumped 3.4% in first half of 2024, reports INDEC

Argentina's economy contracted by 1.7 percent in the second quarter of 2024, the INDEC national statistics bureau reported Wednesday, confirming the depth of the ongoing recession.

That marked the third consecutive quarter with gross domestic product (GDP) in the red, as President Javier Milei's government strives to reduce the country's budget deficit to zero.

Overall, economic activity declined 3.4 percent in the first half of the year compared to data from 2023.

The most notable year-on-year contractions were in the construction sector (down 22.2 percent), manufacturing (down 17.4 percent) and wholesale, retail and repair activities (down 15.7 percent) stand out.

The largest year-on-year increases were seen in agriculture, hunting and forestry (81.2 percent), fishing (41.3 percent), mining and quarrying (6.6 percent) and electricity, gas and water (2.8 percent).

Since taking office in December, Milei has applied a drastic austerity programme in a bid to rein in chronic inflation and government overspending.

He has halted public works, eliminated state agencies, suspended financing to the provinces, fired tens of thousands of public employees and eliminated fuel and transport subsidies.

"Managing is not administering the state. To manage is to shrink the state in order to enlarge society," said Milei in a speech to Congress last weekend.

Monthly inflation has plummeted to the single digits, but analysts have warned this is a result of a massive economic slump as shoppers tighten purse strings. Public consumption was down six percent year-on-year while private consumption plummeted almost 10 percent.

Annual inflation still stands at 236.7 percent, though consumer prices increased only 4.2 percent – down from the 25 percent recorded at the start of Milei’s term.

More than half the population currently lives in poverty, according to private reports acknowledged by the government to be accurate.

The International Monetary Fund has worsened its outlook for Argentina's economy, which it now expects to contract by 3.5 percent this year, after a 1.6-percent decline in 2023.

In a recent Budget proposal, Milei’s administration forecast that economic activity would fall by 3.8 percent in 2024. It predicts growth of five percent next year, as well as an inflation rate of 18.3 percent.