Argentina Faces Economic Downturn Amid Austerity Measures

Argentina's economic activity is predicted to have declined by 1.9% in June compared to last year due to austerity measures under President Javier Milei. Analysts highlight that, while the grains and gas sectors show growth, domestic consumption and construction have sharply declined. Argentina's recovery is expected to be slow.

Argentina's economic activity likely fell in June compared to the same month last year, analysts suggest, marking a return to decline after a rare increase in the previous month. The dip is attributed to stringent austerity measures and cost-cutting under the libertarian administration of President Javier Milei.

The median forecast from 16 analysts predicts a 1.9% year-on-year decrease in economic activity for the month of June, in contrast to a 2.3% rise in May. While the grains and gas sectors experienced growth, weak consumption and construction have contributed to the downturn. Although President Milei's fiscal policies have achieved rare fiscal surpluses and rebuilt central bank reserves, they have also led to significant economic suffering in key sectors.

"The economies of major cities, centrally linked to consumption and the industrial and construction sectors, continue to show a strong downward trend," noted Pablo Besmedrisnik, an economist at VDC consultancy. Agriculture is expected to rebound from a low base recorded last year, and shale production is boosting the oil and gas sector. However, Argentina's recovery is anticipated to be protracted, particularly with inflation rates remaining the highest globally despite recent slowdowns.

(With inputs from agencies.)