Argentina: The skies clear up

Country Report

Getting the economy back on its feet

Argentina will be playing for high stakes in 2017. Politics-wise, President Macri will seek a majority in the mid-term legislative elections on October 22. The ruling coalition is currently in a minority position and has resorted to executive decrees. Confidence in the government and its reform agenda to address the inherited imbalances and weakened institutional framework remains resilient. This is despite the corrective measures that deepened the recession and postponed the recovery of the economy.

Real GDP contracted by -2.3% in 2016, compared to the average +3.3% recorded in the previous decade. On the one hand, exports and public consumption increased by +3.7% and +0.3%, respectively. On the other hand, private consumption and investment shrank correspondingly by -1.4% and -5.5%.

However, production increased by +0.5% q/q in Q4 2016 and the figure for the previous quarter was revised upwards from -0.2% q/q to +0.1% q/q. These recent releases support the view that Argentina is clearly bottoming out of recession. Investment is estimated to become the engine of growth in 2017 and push the economy back into positive territory. The needed fiscal consolidation has been partially postponed as social security expenditures and investment in public works add to approved tax cuts.



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argentina-country-report-mar17.pdf

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