The economy likely remained in the doldrums in the final quarter of 2019, after contracting in year-on-year terms in the third quarter. Economic activity continued to shrivel in October-November, while consumer confidence was stuck in pessimistic terrain and export growth cooled in the fourth quarter. On a somewhat more positive note, industrial production expanded for the first time in 20 months in December. Meanwhile, in early February, the Senate ratified the lower houses decision to grant the government the power to restructure around USD 100 billion of the countrys foreign-denominated sovereign debt. Of this, around USD 44 billion is owed to the IMF, with whom the government held talks last week. This was a first step in the negotiation process with creditors, whose agreement is aimed for by 31 March.
The economy will remain mired in recession this year, although the pace of contraction is expected to ease. Downbeat investor confidence, runaway inflation and sky-high interest rates will weigh on domestic demand, while the new levies will hit export growth. Debt renegotiations and interventionist policies further cloud the outlook. LatinFocus Consensus sees the economy contracting 1.5% in 2020, which is unchanged from last months estimate, before rebounding 1.7% in 2021.
Industrial Production (annual variation in %)
Inflation Rate (CPI, annual variation in %, eop)
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Industrial production dipped 0.1% year-on-year in January, according to data released by the National Statistical Institute (INDEC) on 5 March.
On 5 March, in a further bid to prompt an economic recovery and amid some moderation in inflationary pressures, the Central Bank of Argentina (BCRA) decided to reduce the lower floor for the LELIQ rate to 38.0%.
The monthly indicator for economic activity (EMAE, Estimador Mensual de Actividad Econmica) dipped 0.3% year-on-year in December, after logging a 2.0% contraction in November.
Exports dipped 0.8% in year-on-year terms in January, contrasting Decembers 0.7% uptick.
Consumer prices rose 2.3% over the previous month in January, coming in below Decembers 3.7% rise and market expectations of a 3.5% increase, according to the National Statistical Institute (INDEC).
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