Argentina’s economy contracted more than expected in April, as a record drought negatively affected trade, which is a sign that the economy will most likely enter a recession later this year.
Economic activity in Argentina fell by 1.9% in April compared to the previous month, more than the average estimate of a decline of 1.2%.
The economy shrank 4.2% compared to last year, according to government data published on Friday. The decline on an annual basis exceeded all forecasts of economists surveyed by “Bloomberg”.
A record drought in Argentina is hitting the outlook for commodity exports, which are helping to drive the country’s growth. Consumer spending is also negatively affected, as an inflation rate of more than 100% destroys purchasing power.
In addition, the presidential elections this year are exacerbating uncertainty about economic activity, as investors are anticipating the possible reversal of an unconventional set of economic strategies such as price stabilization, as well as currency restrictions similar to policies dating back to the Byzantine era.
Economists who participated in the survey of the Central Bank of Argentina predict that GDP will shrink by 3% for the current year, followed by another decline in GDP during 2024.
