He Argentine Gross Domestic Product (GDP) will contract around 2% this year as a consequence, mainly, of the impact that the historic drought had on the production of the agroindustrial sector, according to the projection of private consultants.
Despite the poor performance of the economy at a general level, the Mediterranean Foundation highlighted that “If the agricultural sector is excluded, activity would end up growing almost 1% this year.”
In this regard, the Foundation maintained that “This last figure is surprising, in a context of growing inflation and high uncertainty. An official dollar played in favor, which, on average, lagged behind inflation, which implied a certain improvement in the purchasing power of the population” . And they added that “There was also the ‘small money plan’ in the electoral period, with greater public spending and tax reductions.”
The Mediterranean estimates a general drop of 2% in GDP for this yearthe same figure as that projected by Sarandí Consulting in its last publication.
Argentine economy 2023: sector by sector
When putting the magnifying glass at the sector level, in 2023 the growth of mining and the hydrocarbon sector, mainly due to the impetus of Vaca Muerta.
Contrary, the worst performance was shown by agriculturewhich was strongly affected by the historic drought that devastated crops and crops. Between January and October, it accumulated a drop of 23.8% year-on-year.
The work of the Mediterranean Foundation also analyzed the performance of other sectors. According to the entity, the industry “fell sharply during the recession and pandemic, and then made a significant recovery. However, in 2023 it began to show signs of stagnation, partly explained by the problems in obtaining imported inputs.”
In regards to the construction, It was observed that “In employment, a significant increase has been noted (but not in production) during 2023, possibly linked to public works, in the middle of the electoral period.”
In the Services there was a relative improvement in almost all areas in 2023, with the notable exception of financial services. Over there, “homebanking technology was combined, which requires less employment, and the situation of fewer loans to the private sector, with funds that are allocated more to the State (via Leliqs, passes and bonds)”, the entity maintained.
In the real estate and business services, its good performance was notablelinked to jobs in professional studies (legal, accounting, and others).
For its part, in Hotels and restaurants continued the recovery, although the sector is still below the levels of six years ago.
Argentine economy: projections 2024
Looking ahead to 2024, the forecasts for the economy in general are not encouraging in terms of activity, despite the fact that a recovery in agriculture is expected with the drought already largely overcome.
All the participants of the survey of market expectations (REM) carried out by the Central Bank (BCRA) they estimated a new average contraction of 2.4% for next year, which implied a deterioration of 0.7 percentage points (pp) compared to the previous projection.
Last week “a new government took office in a rather complicated situation, with several distortions to be resolved: repressed inflation, Central Bank with minimal dollar reserves, fiscal deficit with low financing. This combo is a sign that “There will be no expansive policies in the short term (lower economic activity)”noted the Mediterranean Foundation.
And he added that next year “It will be more complicated for those who sell in the domestic market. On the other hand, the external market presents a better panorama.”
Source: Ambito
