Sharp 6.9% Drop in Argentina’s Economic Activity Index: Tough Times Ahead for Industrial, Domestic Consumption Sectors

According to recent data from the Statistics Agency INDEC, Argentina’s economic activity index is projected to have decreased by 6.9% year-on-year in March. This marks the largest drop since 2020 and the fifth consecutive month of contraction. A survey of 13 local analysts conducted by Reuters showed that estimates for the year-on-year contraction ranged from 4% to 10.3%.

Despite some positive indicators, economists are cautious about the economic outlook for the first and second halves of the year. Sectors related to domestic consumption, industry, and construction are experiencing significant declines, while mining and agriculture are showing signs of growth. The industrial production indicator revealed a 21.2% slowdown in March compared to the previous year, according to government data.

Economist Pablo Besmedrisnik noted that these declines are due to factors such as high inflation rates and risks associated with the foreign exchange market. Federico Gonzalez Rouco from Empiria Consultores emphasized the gradual recovery expected in the coming months, citing concerns about inflation and risks associated with the foreign exchange market. Official figures from INDEC are anticipated to be released on Wednesday, providing a clearer picture of the economic situation in Argentina.