Argentina exits recession with H2 growth

BUENOS AIRES: Embattled President Mauricio Macri can breath a sigh of relief after new figures show Argentina’s economy emerged from recession in the third quarter, earlier than previously estimated, with growth then accelerating in the fourth.

Gross domestic product expanded 0.5% in the last three months of the year from the previous quarter, the national statistics agency said in a statement on Tuesday. Third-quarter growth was revised to 0.1%, from a decline of 0.2%. Still, for the full year, the economy contracted 2.3%.

“There’s enough evidence here to support the government’s claim that the economy is now through the worst,” Neil Shearing, chief emerging markets economist at Capital Economics, wrote in an emailed report.

The incipient recovery in production is the first sign that Macri’s policies are gaining traction after a year in which inflation soared, unemployment rose and purchasing power declined.

Still, the rebound is too weak for labour unions planning the first national strike under Macri for April 6, shutting down public transport and bringing the country to a halt on the first full day of the World Economic Forum in Buenos Aires.

Macri assumed office in December 2015 promising that the negative effects of his reforms would be over by the second half of 2016.

The government expects the economy to grow 3.5% in 2017.

Growth in the fourth quarter was led by agriculture, which expanded 1.6% from a year ago. Restaurants and hotels and social and health services grew 1.9% and 2.3% respectively.

The economy contracted 2.1% in the fourth quarter from a year earlier, with manufacturing and construction shrinking 5% and 10.7%.