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ECONOMY | 18-12-2019 00:23

Economy grows faster than expected, technically ending 18-month recession

Argentina’s economy grew faster than expected in the third quarter, technically ending an 18-month recession.

Argentina’s economy grew faster than expected in the third quarter, technically ending an 18-month recession.

South America’s second-largest economy grew 0.9 percent from the April-June period, its first quarterly expansion since 2017, and faster than the 0.6 percent forecast by economists surveyed by Bloomberg.

Yet the country is poised to slip right back into recession, according to a Central Bank survey of economists who forecast quarterly contractions in the end of the year as well as in the beginning of 2020. A recession is defined as two consecutive quarters of contraction.

The economy shrank 1.7 percent from a year earlier in the third quarter. It is also forecast to contract in 2020, for a third straight year.

President Alberto Fernández, who took office December 10, rolled out a series of so-called emergency measures Tuesday to increase social spending in hopes of kick starting the economy next year.

Argentina fell into recession in mid-2018 amid zigzagging economic policies, global market sell-offs and a historic drought that ruined valuable crop exports. The peso has plunged nearly 70 percent since the start of last year, which fuelled inflation now above 50 percent and triggered double-digit unemployment.

Amid the severe downturn, the previous government led by Mauricio Macri sought a US$56-billion credit line from the International Monetary Fund (IMF) that Fernández now has to renegotiate. The IMF lifeline has been on hold until Fernández spells out his economic policies.

 

by Patrick Gillespie, Bloomberg

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