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Montevideo, November 17th 2018 - 20:03 UTC

Argentina expanded 2.9% last year; 2018 challenging given the persistent drought effect on crops

Friday, March 23rd 2018 - 09:06 UTC
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The administration of president Mauricio Macri has pledged some credit and fiscal support for the embattled farmers.   The administration of president Mauricio Macri has pledged some credit and fiscal support for the embattled farmers.
Indec also revised its estimate for 2016 GDP to a contraction of 1.8%, compared with a 2.2% contraction reported earlier. Indec also revised its estimate for 2016 GDP to a contraction of 1.8%, compared with a 2.2% contraction reported earlier.

Argentina's economy expanded 2.9% in 2017 from the prior year and 3.9% in the fourth quarter versus the same period in 2016, the Indec statistics agency said this week. The year-over-year figure was slightly above the 2.8% annual growth rate given last month by Argentina's monthly economic activity indicator, seen as a proxy for gross domestic product.

The country's GDP figures are closely watched by holders of the country's so-called GDP warrants, which pay out in the event the economy grows 3% or more. With growth of 2.9%, Argentina would narrowly avoid a payment for 2017, though that will not be confirmed until the figure is revised in the second half of this year.

Indec also revised its estimate for 2016 GDP to a contraction of 1.8%, compared with a 2.2% contraction reported earlier.

Likewise prospects for this year are not encouraging since a severe and prolonged drought is eroding Argentina's harvest, mainly soybeans and corn, with overall estimates considerably lower. This will have a direct impact on soybean flour of which Argentina is the world's main exporter, plus a contraction of subsidiary activities related to farming, transport and exports.

The administration of president Mauricio Macri has pledged some credit and fiscal support for the embattled farmers.

In related news Argentina's stats office reported that the country's trade deficit in February reached US$ 903 million compared to a US$ 217 million deficit the same month a year ago. It was the country’s 14th consecutive month with a trade deficit. In January the shortfall was US$ 970 million, according to official data.

Indec also reported that Argentina’s current account deficit widened to US$ 8.738 billion in the fourth quarter of 2017, up from US$ 8.261 billion in the third quarter and US$ 4.158 billion in the fourth quarter of 2016.

For full-year 2017, Argentina posted a US$ 30.792 billion current account deficit, up from US$ 14.693 billion in 2016.

Categories: Economy, Politics, Argentina.

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  • Enrique Massot

    External agencies did give an initial break to the Macri government, but after two years the consequences of an irresponsible management of the economy are becoming too visible.

    According to Focus Economics, “Balance of Trade in Argentine (reached) an all time high of 2543 USD Million in May of 2009 and a record low of -1510 USD Million in November of 2017.”

    Not surprising when most developed countries tend to restrict imports and Argentina runs in opposite direction by opening wide to imports competing with local production that are killing small and medium-sized enterprises.

    “More troublingly, Argentina’s macroeconomic stability in the medium-term is becoming more uncertain…the country is running a persistent trade deficit and the government keeps borrowing from international lenders to finance fiscal spending,” also notes Focus Economics.

    Heavy borrowing is, in fact, the lifeblood that keeps the lights on in Macri’s Argentina.

    What about the practical effects?

    “The Universidad Torcuato di Tella (UTDT) consumer confidence index dropped from 45.2 points in January to 43.8 points in February,” noted Focus Economics.

    “The index dipped further below the 50-point threshold that separates pessimistic from optimistic sentiment among consumers, where it has been almost uninterruptedly since January 2016.”

    Let's remember that Mauricio Macri became president in December 2015.

    However, there was a Eureka moment where the consumer confidence index soared above 50. When? You guessed…just before the October 2017 legislative election in which the governing party did very well. Right after the election, the index abruptly dropped again to below 45 where stands now.

    Hard to believe, but check it out:

    https://www.focus-economics.com/countries/argentina/news/consumer-confidence/consumer-sentiment-worsens-in-february

    Mar 23rd, 2018 - 06:31 pm -2
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