MercoPress. South Atlantic News Agency

Argentina, only country in the region with a contracting economy

More and more Argentines keep falling daily into poverty or indigence

Less than a year into the government of Libertarian President Javier Milei, Argentina will be the only country in the region with negative growth in 2024, according to projections by the World Bank, the International Monetary Fund (IMF), ECLAC, and BBVA, which forecast a 3.2% contraction of Gross Domestic Product (GDP) in South America's second-largest economy.

These figures match those projected by Argentina's own Monthly Estimator of Economic Activity (Emae) published by the National Institute of Statistics and Census (Indec) for the first semester of 2024, which suggests that the negative trend will continue, although it is not expected to sink any deeper despite the strong recession and market volatility.

The only other Latin American country expected to fall is Haiti, which is expected to finish 2024 with a 2.3% GDP drop. The rest of the countries in the region will grow, albeit at different paces. The average growth of Latin America projected for 2024 is 1.9%, while South America will end the year with an improvement of 1.6%.

Way above-average stand projections for Venezuela (4%), Paraguay (3.8%), Uruguay (3.5%), Peru (2.7%), and Chile (2.1%). Meanwhile, Brazil is expected to grow between 1.7% and 2.3%.

See also: Brazil posts GDP growth above expectations in 2Q of 2024

Also anticipating positive figures are Bolivia (1.6%), Colombia (1.4%) and Ecuador (0.9%).

According to the Argentine Central Bank's Market Expectations Outlook (Relevamiento de Expectativas de Mercado - REM), a monthly survey among the country's leading private economists, Argentina's GDP will contract by 3.7% this year, which is a projection even worse than that of most international market analysts.

Of the 17 economic activities measured by the Indec, only six showed positive numbers, mainly those linked to the exporting business thanks to an increase in the official peso/dollar exchange rate.

In this scenario, poverty in the first semester of 2024 reached 52% of the population, a survey by the Argentine Catholic University (UCA) showed. In addition, 17.9% of Argentines had fallen to indigence.

The UCA's Observatory of the Argentine Social Debt (ODSA) found a significant increase compared to the 41.7% and 11.9% estimated by Indec in 2023.

ODSA Director Agustín Salvia pointed out that the current situation, although serious, still does not reach the levels of the 2001-2002 crisis. The growing unemployment is still to match the 20% achieved under President Fernando de la Rua, who had to leave power ahead of time.

According to Salvia, the loss of jobs in the informal sector and low salaries in the formal private sector account for the alarmingly high figures. The Total Basic Food Basket (CBT) went up 81.7% in the first half of 2024. “Workers in the consumer market, industry. and construction did not receive wage increases in the same proportion as inflation due to the fall in the level of activity,” Salvia explained.