GDP collapsed 5.1%, according to INDEC

GDP collapsed 5.1%, according to INDEC
GDP collapsed 5.1%, according to INDEC

The deepening of the recession was mainly explained by the falls in the activity of the manufacturing industry, commerce and construction.

In the midst of the adjustment promoted by the government of Javier Milei, the Argentina’s Gross Domestic Product (GDP) plummeted 5.1% in the first quarter of 2024, compared to the same period in 2023, INDEC reported this Monday. The deepening of the recession was fundamentally explained by the falls in manufacturing, commerce and construction.

According to historical data from the INDEC series, the contraction of the domestic economy was the sharpest for a first quarter since 2019when the activity suffered the consequences of the exchange rate runs that caused a strong devaluation and laid the foundations for the agreement between the government of Mauricio Macri and the International Monetary Fund (IMF).

The private investment was the hardest hit component of GDP demand, with a 23.4% crash in interannual terms. For his part, the consumptionthe component with the greatest weight in what is produced within the country’s borders, registered a 6.7% dropwhile public spending was reduced 5%.

The performance of foreign trade partially offset the declines, since exports improved 26.4% compared to last year, largely due to the low comparison base since 2023 was crossed by one of the worst droughts in history, which harmed external sales of the country’s main crops.

Compared to the immediately previous quarter, the economy contracted 2.6%, with investment also being the most affected with a decline of 12.6%.

What were the sectors most affected in the first quarter of 2024?

The manufacturing industry suffered a collapse of 13.7% year-on-year in its production between January and March, thus becoming the main negative impact of the variation in GDP.

The other two sectors that dragged down the general economic activity in a relevant way were the trade and constructionwith falls of 8.7% and 19.7%respectively.

It is worth noting that the construction crisis was also the cause of the lower level of investments in the real economy. According to official INDEC figures, the “constructions” division within investment had a decline of 26.6%.

To the aforementioned items, financial intermediation can be added, which showed a significant drop of 13%, although with less impact on the aggregate result of the product.

At the opposite extreme, there were three sectors whose production increased in the first quarter: agriculture (+10.2%), mining and energy (+8%) and fishing (+3.2%).

Source: Ambito

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