Argentina: Economic activity deteriorates in June
The monthly indicator for economic activity (EMAE) decreased 3.9% in year-on-year terms in June, which contrasted May’s 1.9% increase and was a much larger fall than markets expected. Looking at the details of the release, the agriculture sector expanded at a slower pace in June, while the declines in the manufacturing and construction sectors worsened.
The latest data means that economic activity contracted 1.4% over Q2 as a whole, a notably softer contraction compared to Q1’s 5.1% decline.
On the reading and outlook, Goldman Sachs’ Sergio Armella said:
“As we anticipated, following May’s harvest driven bump (much stronger agricultural production, in contrast to the poor harvest of 2023), economic activity returned to the weak readings of previous months. We expect activity to remain soft in the second half of the year amid a macro rebalancing process where a sizeable fiscal drag and an erosion of households’ disposable income is taking place. Tight FX and capital controls also discourage new investments.”