Argentina said on Thursday the economy shrank 2.1 percent in the second quarter from the first quarter of 2016, as the country remained mired in recession during the first year of President Mauricio Macri's administration. Compared with the same quarter of 2015, gross domestic product shrank 3.4 percent in the April-to-June period, the first quarter of year-on-year contraction since at least 2015. The government expects a return to annual growth in 2017. Year-over-year declines in Argentina's construction, manufacturing and agriculture industries weighed most heavily on the economy in the second quarter, according to Indec, the government statistics agency. The South American country had growth in the public sector, however, as well as restaurants and hotels and transportation. Macri's center-right administration, which took office in December after more than a decade of leftist rule, has been trying to reform the economy through free-market measures. It has eliminated currency controls and grains export taxes, lowered utility subsidies and settled a long-standing lawsuit with bond-holders that had kept the country in default. Indec revised its estimate for the third quarter of 2015 to growth of 0.1 percent from the prior quarter, up from a contraction of -0.1 percent. That means the second quarter of 2016 was the third consecutive quarter of contraction. Indec also revised growth for the second quarter of 2015 down to 1.1 percent from 1.4 percent and revised first-quarter 2015 growth up to 2 percent from 1.7 percent. Finance Minister Alfonso Prat-Gay said earlier this week that the economy would break its contraction streak in the July-to-September period. This was the second time Macri's administration announced quarterly GDP figures following a major revamp by the statistics agency. The prior administration's economic statistics were widely viewed as manipulated. In addition to recession, Argentina is suffering inflation of around 40 percent this year, although the government expects it to fall to 17 percent next year. Argentina is planning a euro-denominated bond issuance and has tapped three banks to arrange meetings with fixed income investors in Europe beginning next week, Thomson Reuters publication IFR reported on Thursday. The country has already raised nearly $20 billion in sovereign debt after a successful return to global bond markets in April following a 15-year absence. The debt will help finance a stubbornly high fiscal deficit, which ballooned after decades of populist rule, largely due to generous spending on social programs.
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