Argentina's Rebound From Its Crisis Year Trails Economist Forecasts

(Bloomberg) -- Argentina’s economy shrank more than expected in the first month of the fourth quarter, amid a slower-than-expected rebound from the country’s worst downturn in over a decade.

Economic activity fell for a seventh straight month, declining 4 percent in October, according to a report Thursday from the national statistics agency. The median forecast of analysts surveyed by Bloomberg was for a 3.7 percent contraction. From a month ago earlier, activity rose 0.9 percent.

While Argentina’s current account continued to shrink, dropping to a $7.6 billion deficit in the third quarter from a second quarter deficit of $8.3 billion, analysts had forecast a much larger decline. The current account should improve further in the fourth quarter as a plunge in imports created trade surpluses in October and November.

Argentina's Rebound From Its Crisis Year Trails Economist Forecasts

Key Insights

  • Argentina’s agriculture sector, slowly recovering from a historic drought, saw its activity increase in October after four months of sharp declines
  • Starting Oct. 1, the central bank froze the amount of pesos in circulation and implemented a currency band in an effort to reel in runaway inflation. The policies are achieving that aim but economists warn they could exacerbate the recession
  • Consumer prices rose 45.9 percent in October, according to an earlier government release
  • Argentina’s economy is expected to contract 2.4 percent this year and 0.5 percent in 2019, according to government estimates

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