Argentina: Economic activity falls year on year in August but ticks up month on month
Latest reading: The monthly indicator for economic activity (EMAE) decreased 3.8% in year-on-year terms in August, which followed July’s 0.9% decrease. The deterioration largely reflected sharper drops in the manufacturing and construction sectors and softer growth in agriculture. That said, August’s decline was softer than markets were expecting.
More positively, on a monthly basis, economic activity rose 0.2% in August (July: +2.1% mom), the first time in a year that the economy has recorded two straight months of sequential growth. This is consistent with our panelists’ forecasts for a quarter-on-quarter GDP rebound in Q3 as a whole.
Panelist insight: On the reading, Goldman Sachs’ Sergio Armella said:
“Activity levels […] remain weak (-6.2% below the June-2022 cyclical peak) but nevertheless appear to have found a floor in the first half of 2024 (-8.4% and -8.3% below the June-2022 cyclical peak in April and June, respectively). We expect the recovery that started with the second half of the year to continue in the coming months supported by positive real wage growth and increasing credit to the private sector. The performance of the economy in the third quarter has so far been better than we anticipated.”
On the outlook for next year, VDC Consultora director Pablo Besmedrisnik was upbeat:
“2025 will be a year of opportunities. With prices relatively tamed and healthy public accounts, the full emergence of energy as a new source of foreign currency comparable to agriculture can be taken advantage of. Even more so in a context of the normalization of financial conditions, the natural coexistence of Argentina in the global financial ecosystem and the expansion of local credit.”