Argentina Economy Contracts

Argentina’s economy contracted 6.7% in June compared with the same month last year, and 1.3% compared with May, government statistics agency Indec said on Thursday. June was the third consecutive month of decline following 5.2% in May and 0.6% in April, Mercopress reported. Indec detailed that the agriculture sector fell 31% in June from the same month last year, as crops were hammered by one of the worst droughts in decades. Manufacturing decreased 7.5%, while retail activity fell 8.4%. The construction sector also declined but slightly. “The large real GDP contraction in the second quarter was driven chiefly by the negative weather shock over agricultural production and the impact of tighter financial conditions over the broader economy,” Goldman Sachs said. “We expect the economy to remain weak in coming quarters.” Economists expect Argentina to enter into a recession this year as the country has seen its currency depreciate sharply against the US dollar amid a rout in emerging-market currencies and concerns from investors over President Mauricio Macri’s political ability to cut spending and reduce inflation.