Argentina’s economy shrank 4.3% year-on-year in June, a much sharper contraction than expected in the first official growth data reported during President Mauricio Macri’s term.
In the first half of 2016, economic activity fell 1.3% from the same period in 2015, announced the country’s statistics agency Indec, shortly after Macri’s cabinet chief Marcos Pena forecast a 1% contraction for all of 2016, MacroPress reported.
Indec had held off on reporting key economic indicators after Macri ordered a restructuring due to suspicions it manipulated data during the government of his predecessor Cristina Fernandez.
Economic activity shrank at a seasonally adjusted 0.3% pace in June from May, Indec said. A downturn in construction likely drove the contraction in June.
Macri said earlier this month that the economy will likely grow 3.5% in 2017, driven by fresh investments. A former businessman whose election victory in November ended 12 years of leftist policies, Macri said the economy will stabilize in the last quarter of 2016.
The country’s recently overhauled statistics agency relaunched the GDP proxy and the negative result suggests that Argentina’s recession is deepening.
A Reuters poll of economists forecast a median drop of 1.1% for June.
The composition of the country’s monthly estimate of economic activity, or EMAE, is very similar to GDP and it is meant to give forward guidance of the chief indicator.
H1 Growth Negative
Indec data shows the economy shrank 2.1% in both April and May, while in January, February and March it expanded 0.3%, 1% and 0.4%, respectively. As a result, the first half of the year saw negative growth of 1.3%.
In a mid-July press conference, central bank president Federico Sturzenegger told reporters that GDP fell 0.9% in Q2 year-on-year, meaning the country has been in recession since September 2015. He also said GDP fell 0.3% from Q1.
“This government inherited an economy in recession, which began in September of last year, and it’s not me who’s saying that, rather the statistics of Indec show it,” said the central banker.
The 4.3% June decrease was the largest monthly fall in the EMAE since August 2014, when it fell 5.5%. Indec data shows construction was down 19.6% in June year-on-year and industrial output off 6.4%.
To boost construction, the government announced recently it is working to raise infrastructure spending to 6% of GDP.
