Argentina’s economy contracted in the second quarter as the country’s worst pandemic wave curtailed activity and government trade restrictions dampened relations with the private sector.
Gross domestic product fell 1.4% in the second quarter of 2021 compared to the previous period, compared to economists’ expectations of a 1.6% drop. In the past year, GDP has increased by 17.9% due to the base effect of the onset of the pandemic in Argentina, according to government data released Tuesday by the national statistics office of INDEC.
Consumer spending and exports increased in the quarter, while imports and capital investment weighed on output. An increase in Covid-19 cases from April to June forced President Alberto Fernández to return to strict lockdown and halt some activities. High inflation, an erratic policy mix and a temporary total ban on beef exports have also undermined the business climate.
The economic slump comes as Fernández’s government tries to resuscitate its electoral chances ahead of a general midterm vote on November 14. His ruling coalition lost the September 12 primary elections, exposing tensions within his coalition and forcing him to reshuffle his cabinet last week.
On Tuesday, his administration announced that the borders will gradually reopen to tourists from October, while Argentines no longer need to wear masks outside.
After three years of recession, economists expect Argentina’s economy to grow 7.2% this year, according to the central bank’s monthly survey.
by Patrick Gillespie, Bloomberg