By Hernan Nessi
BUENOS AIRES (Reuters) – Economic activity in Argentina likely fell in June from the same month a year earlier, analysts said, as the economy moved back into the red after a rare surge the previous month as a result of tough austerity measures and cost-cutting under libertarian President Javier Milei.
The median forecast of 16 analysts predicts a 1.9% annual decline in economic activity in the sixth month of the year, down from a 2.3% increase in May, as growth in the grain and gas sectors is being weighed down by weak consumption and construction.
The president’s cost-cutting measures have led to rare budget surpluses and allowed the central bank to rebuild its reserves. But the economy has suffered from sharp declines in consumption, construction and manufacturing.
“The economies of large cities, which are central to the consumption, industrial and construction sectors, continue to show a strong downward trend,” said Pablo Besmedrisnik, economist at consultancy VDC.
Meanwhile, we see agriculture recovering from a year-ago low and the oil and gas sector growing thanks to increased shale production, Besmedrisnik said.
Analysts predicted a maximum decline of 3.2% and a maximum growth of 2.0%.
Juan Massot, research director at the Universidad del Salvador in Buenos Aires, said the economic downturn is nearing its bottom, although this is not the case in all sectors.
“While primary sectors such as agriculture, mining and hydrocarbons are growing, sectors dependent on domestic consumption and the real income of the population are doing less well,” said Massot.
Economists expect Argentina’s recovery to be slow as the government tries to contain monetary expansion and prioritizes restrictive fiscal policy to combat inflation that has run at more than 260 percent a year, the highest rate in the world despite a recent slowdown.
Argentina’s statistics agency INDEC will publish its monthly estimate of economic activity for June on Wednesday.
(Reporting by Hernan Nessi)
