Argentina’s gross domestic product (GDP) sank 3.4 percent during the first half of the year, coinciding with Javier Milei’s first half of management, whose shock policies have hit a strong impact on an economy that has already been in con contraction since last year.
As reported Wednesday by the National Institute of Statistics and Censuses (Indec), Argentina’s GDP accumulated a fall of 3.4 % in the first semester, compared to the 2.3% contraction recorded in the same period of 2023.
He said that in the second half the half of GDP contracted by 1.7% compared to the same period of 2023, chaining five quarters in negative, although slowing the rate of collapse from the collapse of 5.2% in the first quarter of this year.
Between April and June, GDP also fell 1.7% compared to the first quarter of 2024, adding three consecutive periods in negative. The situation looks pressing and, in the long term, it remains concerned that the economy is operating at levels similar to those of mid-2010, the CMF bank warned in a report.
In the first half of the year, the economy was impacted by the effects of the sudden devaluation of the Argentine peso last December, barely begun the Milei government, and the drastic adjustment program launched by the new Executive.
The various economic sectors operated during the first semester in a scenario of very high inflation (271.5% year-on-year in June; 79.8% accumulated in the semester), with a sharp fall in household income in real terms that impacted demand, hitting trade and several industrial sectors. In addition, the overall supply contracted 6.4% in year-on-year terms as a result of the fall of 1.7% of GDP and the collapse of 22.5% in imports; global demand fell 6.4%, with a collapse of 29.4 per cent in gross fixed capital formation and an increase of 31.4% in exports, while private consumption sank 9.8% and public consumption fell 6 per cent.
According to the Indec, in half of the 16 sectors that make up GDP there was an annual retraction of activity in the second quarter, but among them there are sectors with a lot of weight, such as construction (-22.2%), manufacturing industry (-17.4%) and trade (-15,7 %).
The positive note was given by the agricultural sector, with an annual jump of 81.2%, although from bases very depressed by the severe drought that hit this activity last year.
The latest private projections collected by the Central Bank and the forecast included by the Government in the draft Budget 2025 indicate that Argentina’s GDP would fall 3.8 per cent in 2024, from a 1.6 per cent retraction in 2023.
This article has been translated after first appearing La Estrella De Panama