The Argentine economy recovered less than expected at the beginning of this year before an expected recession later this year due to high inflation.
GDP in the second largest economy of South America expanded by 0.7 percent in the first quarter of the October-December period, which is less than the average estimate of 0.8 percent, according to “Bloomberg” analysts.
Public spending, consumer spending and capital investment all drove growth on a roughly equal scale, but a 13.5 percent drop in exports and an increase in imports weakened the expansion during the quarter.
A record drought has undermined agricultural exports, which drive activity, tax revenues and trade, while a spike in inflation to more than 114 percent has curbed consumer spending, according to “Bloomberg” analysts.
Import restrictions exacerbated by a government shortage of dollars also weakened manufacturing.
The latest data confirmed a downturn is on the horizon, with Argentina recording a trade deficit of 1.2 billion US dollars in May, its biggest negative figure since 2018 when another drought triggered a recession.
The unemployment rate on the official labor market in Argentina increased to 6.9% during the first quarter. However, almost half of the workforce works informally in mostly cash jobs where data is difficult to track.
