The data of a 1.9% drop in economic activity during the fourth quarter of 2023 compared to the previous quarter showed that
the contraction of last year's gross domestic product was 1.6%
.
This result contrasted with the 5% growth that had been recorded in 2022.
The data reported by the National Institute of Statistics and Censuses also showed a decline of
1.4% compared to the same period of the previous year.
While the cycle trend showed a variation of -0.1%.
Among the reasons that explain the negative numbers in the last period of the year are economic uncertainty - there were presidential elections -, growing inflation, devaluation and obstacles to importing inputs for production that greatly affected the industry.
But one of the aspects that most affected the performance of the activity during 2023 was the severe
drought
that hit the countryside, the country's main export complex, and therefore, the inflow of foreign currency suffered.
According to official data,
among the 17 sectors that make up the GDP, eight showed a drop
in the level of activity.
Among the most notable are
agriculture, which fell 20.2%
;
financial activity, 3.7%;
the industry as a whole, 2.1%.
construction, 1.1% and commerce, registered average drops of 0.5%.
As explained by the statistical agency, “in seasonally adjusted terms, compared to the third quarter of 2023, imports decreased 9.9%, private consumption registered a drop of 1.5%, public consumption had a negative variation of 4.7%. %, exports grew 5.7% and gross fixed capital formation had a decrease of 10.8%.”
However, if the comparison is made
year-on-year, exports fell 6.3%
.
In this aspect, as explained by the consulting firm ACM, “the fixed exchange rate and the uncertainty resulting from the electoral contest,
increased the exchange rate gap
between the parallel exchange rates and the official one, exacerbating devaluation expectations and that dampened exports in that period".
For this year, the results so far
did not change the adverse trend in the level of activity.
The economists who give their opinion in the Market Expectations Survey (REM) of the Central Bank (BCRA) estimated that in 2024 the economy will contract 3.5%.
Until now, there are several indicators that show sharp declines in activity in the first months of the year, within the framework of a severe fiscal adjustment undertaken by the Government.
For example, a recent survey by the Industrial Union (UIA) corresponding to the month of January indicated that
the level of contraction of the sector was at the lowest level of the series
with a drop of 6.9 points compared to the same month of the year. past.
This indicator has been declining for almost two years.
According to ACM, the seasonally adjusted drop of 1.9% in activity in the last quarter “
generates a negative statistical drag of 1 percentage point
for 2024.
Furthermore, according to its analysts, "the initial policies of the new Government adopted to correct macroeconomic imbalances, including the realignment of relative prices and the marked exchange rate adjustment in December, exacerbate the inflationary trend and suggest
a continuation of the economic contraction until, at least , the first half of 2024.
”, they warned in their latest report.
According to the consultancy, signs of contraction can be seen from both the supply and demand sides:
the fall in real wages and the lack of fiscal impulse reinforce the fall in consumption,
while the inflationary context
stops investment decisions
in a panorama of uncertainty.”
However, without adverse weather conditions, the normalization of the harvest could reactivate exports and partially mitigate the expected decline, ACM revealed as a perspective.
According to this consulting firm, the drop in economic activity this year will be between
2.8% and 3.2% on average.
Among other factors to consider for this year, economists maintain that if inflation manages to establish itself in single digits towards the second semester, there could also begin to be a recovery in GDP in that period.