Argentina’s Economic Activity Declines Again in June After Brief May Improvement

Argentina’s economic activity sank again in June, dropping 3.9% compared to the same period last year, following a brief improvement in May. The decline is a worrying sign for President Javier Milei’s government, which had celebrated May’s recovery as a sign that the country was moving past the worst of its economic crisis. On a month-to-month basis, the decline was 0.3%.

“A 0.3% drop is marginal, but it’s notable because it’s another negative figure,” said Eric Paniagua, an economist at the Argentine consultancy EPyCA.

June’s performance failed to maintain the momentum from May, which saw a 1.9% increase, and repeated the poor results from earlier in the year: January (-3.8%), February (-2.7%), March (-8.4%), and April (-2.1%).

Argentina’s economic activity shrank by 3.2% in the first half of the year.

“The recovery that seemed to be gaining early momentum has stalled and reversed,” Paniagua said. “I don’t believe these are favorable numbers for the government, which had been celebrating some positive data as a sign that Argentina’s economy was back on a growth path.”

The downturn in Argentina’s economic activity was mitigated somewhat by the strong performance of the agricultural sector, which saw an 82.4% increase in June, followed by a 4.6% rise in the mining sector.

Despite the positive performance in agriculture, the outlook for the rest of the year is less optimistic. As more recent data becomes available, “it will be hard to imagine that the agricultural sector will maintain the same efficiency level,” Paniagua explained.

Among the worst-performing sectors in June were construction, which saw a 23.6% decline, and manufacturing, which dropped by 20.4%.

Source: Valor Econômico

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