Argentina's economy shrank more than expected in April, suffering record drought

Argentina’s economy contracted more than expected in April as a record drought took its toll on trade, a sign that the economy is likely to enter recession later this year.

Economic activity fell 1.9 percent in April from a month earlier, more than median estimate for a 1.2  percent decrease. The economy shrank 4.2 percent from a year ago, according to government data published Friday. The year-on-year drop exceeded all forecasts of economists surveyed by Bloomberg.

A record drought in Argentina is ravaging forecasts for essential commodity exports that help drive growth. Consumer spending is also suffering as inflation running at over 100 percent decimates purchasing power. Moreover, this year’s presidential election adds uncertainty to economic activity, as investors eagerly await the potential reversal of an unconventional set of economic strategies like price freezes and byzantine currency controls.

Economists surveyed by Argentina’s Central Bank anticipate that gross domestic product will shrink three percent this year, followed by another decline in GDP in 2024.