Argentina's economy grew less than expected on drought, inflation

Argentina’s economy barely expanded in March as a monthly rebound in industrial output and construction outweighed the drag from a record drought and triple-digit inflation.

Economic activity rose 0.1 percent from a month earlier, less than the consensus forecast of a 0.4 percent increase. From a year ago, the economy expanded 1.3 percent, according to government data published Tuesday. 

A record drought in Argentina is slashing forecasts for essential commodity exports that help drive growth. Consumer spending is also suffering as inflation running at over 100 percent batters purchasing power. Moreover, this year’s presidential election is weighing on output and demand as economic policy could swing back in the opposite direction again.  

Still, construction and manufacturing activity have shown resilience in recent months despite accumulating headwinds, buoying economic activity for now. 

Economists surveyed by Argentina’s Central Bank anticipate that gross domestic product will shrink more than 3% this year followed by a shallow contraction in 2024.