Due to its growth rate and efficacy, economic development in Argentina has been the focus of many studies and analysis over the past few years. In fact, data shows that economic expansion — as that seen in Argentina — is characterized by solid signs of recovery in the domestic economy after years of decline, and declining unemployment and robust industrial production.

Predictions Regarding Economic Health in Argentina

Recent data also forecasts a positive and steady growth rate for the first quarter of 2018 in Argentina, and that economic activity marked a high peak in January, with industrial output soaring in February.

The economy is expected to enjoy a solid growth rate in the next couple of years with strong private consumption and a steady expansion in fixed investment serving as the key factors towards such economic development in Argentina. The monetary sector and trade balance, however, have been experiencing a negative record of fourteen months deficit. Moreover, weaker currency and high inflation will play a significant role in taming private consumption growth.

More specifically, inflation in the first quarter of 2018 also remained untamed, implying that Argentina’s external debt commitments will continue to grow in the coming months — especially considering the galloping public spending the country has to fund.

FocusEconomics experts see the economy expanding to 2.6 percent in 2018, which represents a 0.2 percent decrease compared to last month’s forecast; for 2019, growth is expected to reach 3.2 percent.

Improvements in Economic Development

Economic development in Argentina has also helped remedy economic and social distress. The poverty rate fell, for instance, 1.7 percent in the first half of 2017 from the second half of 2016. This outcome acts as a clear sign of the success and impact of President Mauricio Macri’s austerity and recently-enacted measures.

Since taking office in 2015, Macri has worked towards the implementation of market-friendly policies designed to cut the fiscal deficit and draw more foreign investment. Some of those policies, such as a sharp reduction in subsidies for electricity and gas, are deemed quite drastic by some and contributed to inflation of more than 40 percent last year and high tariffs.

However, the data from Indec statistics agency showed that in early 2017, 28.6 percent of Argentines were living in poverty, which is down from 30.3 percent in the last six months of 2016.

Decrease in Poverty

The same data also shows that the percentage of households living below the poverty line went from 21.5 percent in 2016 to 17.9 percent by the end of 2017. The extreme poverty rate for the second half of 2017 was 4.8 percent, which also represents an improvement from the 6.2 percent in the previous six months and the 6.1 percent from the end of 2016.

Macri’s government began publishing poverty statistics a year ago for the first time since October 2013, and the lower poverty rate and economic expansion, notwithstanding some fiscal and financial hiccups, are signs that Argentina is steadily recovering from its 2017 recession period.

– Luca Di Fabio
Photo: Flickr