Argentina's economic activity fell 1.6% in 2023
, in contrast to 5% growth in 2022, and faces forecasts of a deepening decline this year, amid a severe fiscal and monetary adjustment.
As reported this Thursday by the
National Institute of Statistics and Censuses (Indec)
, the Monthly Estimator of Economic Activity (EMAE), which serves as a provisional advance to measure the quarterly variation of the Gross Domestic Product (GDP),
fell 3.1 in December % compared to
last November.
The indicator also registered an
interannual collapse of 4.5%
in the last month of 2023 .
Official data reveal that, of the 16 activities included in the indicator, five productive sectors recorded year-on-year declines last December, among which
financial intermediation (banks, -12.2%), the manufacturing industry (-11.9) stood out.
%) and commerce (-8.5%)
.
On the contrary, in the last month of last year the year-on-year improvements in fishing (8.8%) and agricultural activity (8.1%) stood out, after the severe drought that hit Argentina since the end of 2022 and for much of part of 2023.
In 2023, the productive sectors have also faced a scenario of financial tensions, a strong
devaluation
of the Argentine peso, an increase in the cost of credit,
difficulties in importing
inputs and capital goods and in canceling debts abroad, an increase in costs and a contraction of the consumption.
Conditions worsened in the last quarter of 2023, in the heat of the strong uncertainty unleashed by the electoral process that culminated with Javier Milei's accession to the Presidency, to apply a fiscal 'shock' plan and profound reforms to deregulate
the economy.
.
The strong fiscal adjustment in January, added to the inflationary flash in December (25.5% monthly) and January (20.6%), is already having a full impact on variables such as consumption and, in fact, the forecasts for economic activity in 2024 they are not good.
Economic forecasts 2024
While the
International Monetary Fund (IMF)
projects that
Argentina's GDP will contract by 2.8% this year
, private economists consulted monthly by the Central Bank (BCRA) for its expectations report predict a drop of 3%.
Although in general private consultants see a recovery in the agricultural sector, one of Argentina's economic drivers, this would not compensate for the decline in other activities affected by the collapse in consumption as a result of a severe deterioration in household purchasing power.
"The inflationary shock that implied a sharp drop in purchasing power, the strong fiscal adjustment committed by the authorities and the lack of a clear horizon for investment, affect the forward dynamics," commented the Capital Foundation in a report,
which
forecasts for this year a drop in GDP of 4.3%.
According to the Capital Foundation, at the beginning of the year "the stagflation process deepened" and "the challenge of the new Government in this matter is to restart the engines of the economy and generate a long-term horizon that allows us to see the light." at the end of the tunnel."