Economy unexpectedly shrank for second straight month in March

Argentina’s economy shrank for the second straight month in March as accelerating inflation diminished wage gains.

Economic activity declined 0.2 percent compared to February, far worse than economists’ expectations for one percent growth. From a year ago, activity rose 11.4 percent in March, reflecting the rebound from last year’s strict lockdown at the beginning of the pandemic.

Faster inflation ate into Argentina’s second straight month of real wage growth in March, making paycheque gains marginal after months of losses. Manufacturing posted narrow gains in the month, while construction activity pulled back. Still, both those sectors have seen hiring expectations and job growth recover in recent months.

Government officials see seven percent economic growth this year, coming off three straight years of contraction. However, a recent ban on beef exports, in addition to retaliation from farm groups, complicates the outlook alongside elevated inflation.