Argentina’s economy shrank less than forecast during election

Argentina’s economy posted a slight contraction in October despite a turbulent presidential election cycle that stoked policy uncertainty and yet another currency selloff in parallel markets. 

Economic activity in October fell 0.1 percent from a month earlier, less than the median estimate for a 0.6 percent decline among economists surveyed by Bloomberg. From the same month a year earlier, activity rose 0.6 percent, according to government data published Thursday. 

Separately, the unemployment rate for the formal labour market during the third quarter fell to 5.7 percent, its lowest level since at least 2003, official figures show. 

A three-way race before the October 22 presidential election whipped up market volatility, sending Argentina’s parallel exchange rate from 804 pesos per dollar to as high as 1,035 per dollar within three weeks before paring losses. The rapid move fanned inflation that’s now running faster than 160 percent annually, the highest level since Argentina exited hyperinflation in the early 1990s. 

Argentina faces a challenging economic outlook in 2024, according to President Javier Milei, who warns about “stagflation” as he implements shock reform measures. Economists surveyed by the central bank forecast that gross domestic product will contract 2.4 percent next year, double the estimated decline for this year.