Economic Activity in Argentina: Analysis

By Hernan Nessi

BUENOS AIRES (Reuters) – Economic activity in Argentina likely fell in October compared to the same month last year, according to a Reuters poll of market analysts conducted on Wednesday. However, there is a possibility of month-on-month growth.

The median forecast from 12 analysts predicts a 2.5% contraction year-on-year in October, marking the fifth consecutive month of decline. Estimates varied widely, with predictions ranging from a 4.4% contraction to a 0.7% growth.

Despite the expected year-on-year decrease, analysts suggest that economic activity may have increased in October compared to September. Alejandro Giacoia, an economist at Econviews consulting firm, noted that a year ago, Argentina’s economy was “overstimulated” due to heightened public spending prior to the elections; this influences the year-on-year comparisons.

Month-on-month economic activity has been showing signs of bottoming out around April, according to Giacoia. “It is quite clear there is a certain rebound, although it is not yet so palpable in the streets,” he stated.

Similarly, consulting firm ABECEB forecasts economic activity growth in October compared to September, citing positive data from tax collection, imports, electricity demand, consumption indicators, car production, and registrations.

Looking ahead, analysts expect signs of a more significant recovery in economic activity in the coming months. According to Orlando Ferreres & Asociados, “The recovery of wages in a context of a strong deceleration of inflation will help recompose domestic demand, hand in hand with the growth of consumer credit.”

Argentina’s INDEC statistics agency is expected to release economic activity data for October on Friday afternoon at 19:00 GMT.