Argentina Economy

Argentina: GDP rose 0.6% yoy in the second quarter but is expected to fall 3% this year

• Private sector foreign capital formation reached USD 5.909 million, more than doubling last year´s and attaining the highest monthly value since 2003. Although year to date figures total USD 19.741 million, recent FX regulations should limit US dollar purchases and decelerate the pace in the coming months.
• Hence, International Reserves fell USD 13.799 million down to USD 54.100 million during last month, and 25% since August 11th to date. While negotiations are still going on with IMF officials to free another USD 5.400 million, the main source of US dollars should come from exports. Settlements from seed exporters totaled USD 2.641 million last month, and the outlook is of increasing flows in the coming months.
• Second quarter growth figures signaled that, despite the boost given by the agro sector, the rest of the economy is still contracting. GDP fell 0.3% qoq seasonally adjusted and rose 0.6% yoy but fell 2.5% in the first half. Most outstanding was Investment, which rose 1.5% qoq s.a. due to construction of oil wells, and Consumption, which remained flat after falling for a complete year. These figures, together with the recent Outlook change, would lead to negative growth of 3% this year.