Activity plunged throughout Q1, as did industrial production. Runaway inflation and sky-high interest rates, together with plunging real retail sales, suggest consumer spending and investment activity remained in the doldrums. However, a weaker peso and growing agricultural production are supporting the ongoing external adjustment. Moreover, the month-on-month increase in consumer prices moderated in April after three months of acceleration, and April’s primary fiscal surplus followed Q1’s positive fiscal outturn. As October’s elections approach, the political landscape is heating up. In mid-May, ex-President Cristina Fernández de Kirchner announced she will run for vice-president on a ticket headed by her former cabinet chief Alberto Fernández. Given the presidential candidate’s moderate credentials, the risk of a return to radically interventionist policies seems less of a threat.
Argentina Economic Growth
The economy will contract this year, as sky-high interest rates, runaway inflation and nosediving public investment weigh on domestic demand. Nevertheless, external accounts should improve markedly, thanks to higher agricultural output and a weaker peso. The uncertain outcome of this October's elections and possible financial turbulence cloud the outlook. LatinFocus Consensus Forecast analysts see the economy contracting 1.3% in 2019, which is unchanged from last month’s estimate, before expanding 2.1% in 2020.