Argentine GDP fell by 4.3% in June from the same time last year - sharpest decline since 2002 crisis

Argentina's National Statistics and Census Institute (INDEC) today published its first Monthly Economic Activity Estimate since November. Argentine GDP, according to the report, fell by 4.1% in June compared to the same time last year; GDP for the first half of 2016 was down by 1.3%.

This was the third consecutive monthly decline, with April and May both down 2.1% from a year earlier. This trend is in marked contrast to the 2.4% growth recorded in 2015, before the effects of a 40% devaluation, massive utility and fare hikes, and other austerity policies decreed by right-wing President Mauricio Macri.

This monthly GDP report is the first since the Macri administration decreed a statistical blackout within days after taking office last December; that report, published November 20, showed growth in September 2015 of 2.8% from a year earlier.

An earlier quarterly report, published by INDEC on June 29, had estimated GDP to have grown by 0.5% in the first quarter from the last time last year. Its claim that private consumption grew by 1.1% and public consumption by 2.7% lacked credibility, local economists pointed out, given the doubling in inflation rates and sharp cuts to public works since Macri took office.

While monthly reports exclude a detailed sectoral analysis (that should appear in the next quarterly report, due in September), INDEC's other recently published data suggest that manufacturing and construction are bearing the brunt of this recession. Manufacturing declined 6.4% in June according to the latest report, while construction did so by 19.6%.

Stagflation

Inflation, estimated by the City of Buenos Aires to have doubled to 47%, is also taking a toll on retail sales. The CAME medium business chamber estimates real sales to have fallen in July by 8.1%, and INDEC's own data on supermarket and shopping center sales is even worse. The June INDEC report showed that while the peso value of sales rose by 27% in supermarkets and shopping centers, real sales in each fell by nearly 14%.

The latest quarterly INDEC labor market survey, published yesterday, showed that unemployment rose sharply from 5.9% in QIII 2015 (the last quarter covered before the statistical blackout) to 9.3% in QII 2016 - a 64% increase in the number of unemployed in just six months and the highest level in almost a decade.

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