The economy contracted by 2.7 percent in July compared to the same month of 2017, the INDEC national statistics bureau announced on Wednesday, with the first seven months 0.8 percent down cumulatively on the same period last year
Industry and commerce absorbed most of the punishment because agriculture is already rebounding from the summer drought, while construction continues to grow at a decelerated rate. Yet agriculture has only improved when measured against drought levels, not last year, since it has registered a 10.1 percent fall since last July as against minus 5.1 percent for industry and minus 6.4 percent for commerce. But recent slumps were much sharper, thus adding up to growth for farmers. The only positive sectors were financial activities (7.1 percent), real estate (2.3 percent) and construction (one percent).
Economists are already predicting a contraction of 1.7 percent for August with negative figures continuing for the rest of the year due to exchange rate volatility, high interest rates and public works cuts.
Meanwhile the trade deficit continued to grow in August despite devaluation with exports (minus 1.4 percent) falling faster than imports (minus 0.3 percent) in defiance of the conventional economic wisdom. The deficit thus neared US$7 billion for the first two-thirds of the year (US$6.993 billion, to be exact) but is expected to close 2018 at around US$ five billion thanks to devaluation (an improvement on the US$8.47 billion of 2017), returning to surplus next year.
August exports totalled US$5.167 billion as against imports of US$6.294 billion. Economic consultants continue to blame the drought, noting that last month’s soy sales were 31 percent down on the previous August.