Argentina’s economy plateaued in July as a historic inflation spike caused by political volatility paralysed some sectors.
Economic activity was flat at zero percent in July from a month earlier, better than with economists’ expectations of a 0.8 percent decline. From a year ago, the economy grew 5.6 percent, according to government data published Monday.
Manufacturing and construction posted monthly declines while tourism and mining registered gains in July. economy
Monthly inflation in July accelerated to a 20-year high as a political crisis resulted in three economy ministers in about four weeks. Minister Sergio Massa is trying to cool inflation through a mix of traditional and unconventional measures.
“Stability in Argentine’s July economic activity was a pleasant surprise given two shake-ups at the Economy Ministry in the month. The result reinforces the chances that GDP grows above four percent this year, even if the economy slides in coming months amid soaring interest rates and waning effects from reopening," said Adriana Dupita, Bloomberg's Brazil and Argentina economist.
Many economists project annual inflation reaching 100 percent by the end of this year or early in 2023 as Massa has yet to anchor Argentines’ expectations and the Central Bank runs low on cash reserves, a trend provoking concerns about a major currency devaluation.
While Argentina is expected to post growth for all of 2022, July’s figures likely foreshadow more declines to come. Economists surveyed by the Central Bank project the economy contracting in the second half of this year.
by Patrick Gillespie, Bloomberg