Argentina Economy Expanded Most Since 2018 in First Quarter

Sign up for the New Economy Daily newsletter, follow us @economics and subscribe to our podcast.

Argentina’s economy grew at the fastest pace since 2018 at the start of this year as higher agricultural prices boosted exports, while investment and consumer spending continued to recover from last year’s crash.

Gross domestic product grew 2.6% from the previous quarter, higher than economists’ expectations for a 2.3% increase. From a year ago, Argentina’s economy grew 2.5% in the first quarter, its fastest pace in three years, according to government data published Wednesday.

Exports surged 19.2% on a quarterly basis, aided by rising prices for soy products and other commodities. Capital spending jumped 6.1%.

Argentina Economy Expanded Most Since 2018 in First Quarter

Argentina’s economy will grow this year for the first time since 2017, according to analysts surveyed by the central bank, as business activity picks up after the downturn caused by the pandemic. Even so, business leaders complain that they are being held back by price controls, an overvalued exchange rate and export curbs designed to keep a lid on inflation.

Read More: Argentina Dials Back Beef Export Ban as Inflation Persists

Analysts forecast a contraction in the second quarter, according to the bank’s monthly survey. A strict lockdown in part of May and a farmer’s strike in protest of a temporary ban on beef exports likely weighed down activity during that period.

“The economy’s exit from debt and poverty remains in flux,” said Adriana Dupita, economist at Bloomberg Economics. “The pandemic will constrain the recovery in services and employment in the near term.”

ARGENTINA REACT: Incomplete Recovery Illustrates Challenge Ahead

A ban on firing workers is also slowing the recovery by providing a deterrent to hiring new employees, according to Argentine industry chamber UIA. Annual inflation accelerated to 49% in May, its fastest pace since the pandemic hit the country last year, while wage growth hasn’t kept up.

Although vaccinations have picked up in recent weeks, only 8% of Argentines are fully vaccinated, trailing regional peers such as Brazil, Mexico and Chile. Argentina has surpassed the U.S. in total deaths per million people.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.