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Macroeconomic outlook report: Argentina

Second quarter of 2018

During the second quarter of 2018, the Argentine economy entered recession, slowing its year-over-year growth rate by 8.10 p.p. to -4.24%. The main cause of this GDP performance was the fall in domestic demand, which suffered a deceleration of 5.61 p.p. to -0.37%. This was combined with the slowdown in exports of 13.82 p.p. to -7.47%. In the labor market, the unemployment rate increased 0.50 p.p. compared to the first quarter of 2018, to 9.60%, while the employment creation rate slowed by 0.58 p.p. to 1.52% year-over-year. The peso depreciated against the dollar by 19.17% with respect to 1Q18, recording an exchange rate of 23.48 ARS/USD. Finally, inflation stood at 24.20%, after accelerating by 2.24 p.p. with respect to 1Q18.

Macroeconomic overview

  • During the second quarter of the year, year-over-year growth in Argentina's GDP slowed by 8.10 p.p. from 1Q18 to -4.24%. This was mainly due to domestic demand, which slowed by 5.61 p.p. to -0.37%, following lower growth in private consumption, public spending and investment. This occurred as a consequence of the increase in the exchange rate, with the consequent acceleration of inflation and a fall in real wages.
  • In the labour market, the unemployment rate rose by 0.50 p.p. to 9.60% and the year-over-year growth rate of employment was 1.52%, decelerating by 0.58 p.p. with respect to the first quarter of the year.
  • The Argentine peso registered a new devaluation against the dollar, reaching an exchange rate of 23.48 pesos per dollar. This figure represented an increase of 3.78 pesos per dollar (19.17%) over 1Q18.
  • Inflation stood at 24.20% in the second quarter of 2018, 2.24 p.p. above the rate recorded in the previous quarter, surpassing the 15% BCRA target for 2018. The acceleration of the general price level was driven by the depreciation of the peso.

For more information, click here to access the executive document in pdf (only avalaible in Spanish).

© GMS Management Solutions, S.L., 2018. All rights reserved. The information contained on this publication is of a general nature and does not constitute a professional opinion or an advisory service. The data used in this publication come from public sources. GMS Management Solutions, SL assumes no liability for the veracity or accuracy of such data.