Argentina Economic Outlook
February 13, 2018
Recent data suggest economic growth cooled in the fourth quarter of 2017. Industrial production barely increased in December after eight consecutive months of expansion, and the index of economic activity lost steam in November. The external sector closed 2017 with the largest trade deficit on record and will likely cause the current account deficit to swell in Q4. Argentina’s widening current account deficit is becoming increasingly worrying, not only because it drives up the economy’s vulnerability to external shocks, but also because it is putting additional pressure on the Argentine peso and the country’s ballooning external debt obligations. The currency continued to depreciate in January at a moment when subsidies for basic products, such as energy and transportation, were slashed, contributing to stubbornly-high inflation. Despite additional subsidy cuts in the pipeline, the government’s fiscal spending and need to tap into international debt markets are expected to remain elevated in the foreseeable future.
Argentina Economic Growth
The economy is set to grow at a faster pace in the next two years on the back of growth in fixed investment and private consumption; private consumption is nevertheless expected to decelerate from 2017’s print in part due to persistent inflation. FocusEconomics panelists see the economy expanding 3.0% in 2018, which is unchanged from last month’s forecast. For 2019, growth is expected to reach 3.2%.
Argentina Economy Data