Argentina's Macrisis: GDP falls 2.6% in 2018; 7% in December

Data published today by Argentina's Statistics and Census Institute (INDEC) show that the nation's GDP fell 2.6% in 2018, and 7% in December from the same time last year.

The contraction in the region's third-largest economy was the most severe since 2009, at the depths of a worldwide financial crisis.

The sharpest decline this year came from agriculture, which plummeted 15.9% amid the worst drought since 2009.

Steep declines for 2018 were also seen in retail/wholesale trade (-5.1%), manufacturing (-4.3%), and transport and communications (-2.7%). Real exports, despite a 51% devaluation, slipped 0.5% in 2018.

Over 191,000 jobs were lost in 2018 - a loss is equivalent to 1.5 million jobs lost in the U.S.

From plaudits to bailout

This is the second recession since President Mauricio Macri took office, and as of December, GDP was 4.6% below November 2015 levels - when Macri was narrowly elected promising to spark growth with deregulation and tax cuts.

Costly corporate tax cuts failed to spur investment or exports, and $61 billion has instead left the country since Macri took office.

Macri resorted to foreign borrowing to cover said losses, doubling Argentina's public foreign debt to $175 billion. A $60 billion carry-trade debt bubble known in Argentina as the "financial bicycle" ultimately collapsed in April.

The ensuing crisis forced Macri to borrow $29 billion from the IMF since June 22 - part of a $57 billion bailout agreed to with the IMF in exchange for deep budget cuts which opponents see as both unconstitutional and recessionary.

The IMF - vocal supporters of Macri throughout his tenure - is expected to approve another $10.7 billion loan this March despite a 2018 budget deficit of 743 billion pesos ($26 billion), or 5% of GDP.

During a monitoring mission to Buenos Aires last week, IMF South America division head Roberto Cardarelli reportedly admitted in private that his "sole mission was to help guarantee Macri's re-election, at Washington's request."

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Argentine President Mauricio Macri entertains IMF director Christine Lagarde and IMF South America head Roberto Cardarelli (second from right) during a recent visit.

Cardarelli reportedly admitted in private that the IMF bailout is "unsustainable" and that his "sole mission was to help guarantee Macri's re-election, at Washington's request."