Economic activity slowed its year-on-year decline in July and rebounded 1.7% compared to June

The economic activity fell 1.3% in July compared to the same month of the previous year and slowed the year-on-year decline in June by 1.7 percentage points (pp) (-4%)as reported by the National Institute of Statistics and Census (INDEC). In the seasonally adjusted monthly measurement, it rebounded 1.7% compared to June.

In the first seven months of the year, the Monthly Estimator of Economic Activity (EMAE) which publishes the INDEC accumulates a fall of 3.1%.

So far this year Javier Milei’s governmentbetween December and July, only in May the EMAE showed an interannual increase, while in the other months the decreases ranged between the peak of 8.3% in March and the 1.3% July.

Economic activity: which sectors rose and which fell

He monthly economic activity estimator It surveys 15 sectors of the economy, of which only five rose, but they helped the economy to reduce its year-on-year decline by 1.7 pp.

Compared to the same month in 2023, five sectors of activity that make up the EMAE registered increases in July, among which the following stood out: Agriculture, livestock, hunting and forestry (+23.6% yoy) and Mining and quarrying (+5.7% yoy)which in turn, were those with the greatest positive impact on the estimator.

Agriculture, livestock, hunting and forestry was once again the sector with the greatest positive contribution to economic activity. In this regard, the ACM consultancy firm noted that “discounting the effect of the agricultural sector, a year-on-year drop of close to 2.5% YoY is observed in the month under analysis. This reaffirms the ‘buffer’ effect that agriculture has on general activity.”

Meanwhile, ten other sectors of activity showed falls in the year-on-year comparison, among which the following stood out: Construction (-14.8% yoy) and Fishing (-9.9% yoy).

The sectors that had the greatest impact on the EMAE were: Construction (-14.8% yoy), Manufacturing (-5.6% yoy) and Wholesale, retail and repair trade (-5.3% yoy)which together subtract 2.1 pp to the year-on-year variation.

Economic activity rebounded in July compared to June

In the seasonally adjusted monthly measurementthe EMAE marked its third and largest rise, advancing 1.7% compared to June. The year-on-year decline also slowed by more than half. (1.3% vs. 4%). Indeed, the question arises as to whether the economy could finally start growing again in the second half of the year.

“He EMAE shows the highest monthly growth rate in a yearreversing the contraction of June and confirming that the economy hit its bottom in the second quarter and is entering the second half of the year consolidating the recovery,” he analyzed. Lautaro Moscheteconomist at the Liberty and Progress Foundation.

For ACM, Although the economy remains below last year’s level, it is beginning to show signs of a slow recovery. “Looking ahead, we expect to see greater dynamism in the final quarter, driven in part by the recent recovery in wages in the face of inflation,” they stressed.

Moschet added that “to ensure sustained growth, the key will be the elimination of restrictions”. He added: “If this measure is implemented in the coming months, it could generate a strong stimulus for investments, paving the way for Argentina to resume growth in 2025.”