Argentina’s economy contracted in January as a surge in coronavirus cases due to the Omicron variant weighed on industrial manufacturing.
Economic activity in January fell 0.5 percent from the prior month, better than analysts’ median estimate for a one percent contraction. From a year ago, the economy expanded 5.4 percent in the first month of the year, according to government data published Tuesday.
The results signal a slowdown in growth for South America’s second-largest economy, ahead of the government finalising a deal this month with the IMF to reschedule payments on around US$40 billion in debt. Argentina has grown on a monthly basis for five out of the last seven months.
Argentina saw a surge in the number of daily Covid-19 cases in January, hitting records on successive days before the wave peaked in mid-month. While the death toll and hospital occupancy rates remained low in comparison to earlier waves and the government was able to avoid lockdowns to contain the virus, output slumped as the virus sidelined workers.
The fishing sector was the only other sector to decline, with a drop of 15.3 percent compared to the previous year. Compared to the previous year, 13 of 15 sectors analysed in the report showed increased in activity.
Argentina is targeting four percent growth for 2022, while IMF officials project a weaker expansion, of around 2.5 percent.
by Patrick Gillespie, Bloomberg