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Wed Feb 27, 2019, 08:18 PM

Argentina's Macrisis: GDP falls 2.6% in 2018; 7% in December

Data published today by Argentina's Statistics and Census Institute (INDEC) show that the nation's GDP fell 2.6% in 2018, and 7% in December from the same time last year.

The contraction in the region's third-largest economy was the most severe since 2009, at the depths of a worldwide financial crisis.

The sharpest decline this year came from agriculture, which plummeted 15.9% amid the worst drought since 2009.

Steep declines for 2018 were also seen in retail/wholesale trade (-5.1%), manufacturing (-4.3%), and transport and communications (-2.7%). Real exports, despite a 51% devaluation, slipped 0.5% in 2018.

Over 191,000 jobs were lost in 2018 - a loss is equivalent to 1.5 million jobs lost in the U.S.

Downward trend

Data show that the current downturn, which began in April, worsened rapidly throughout 2018.

GDP reached a growth rate of 3.9% in the first quarter; but since April has averaged a decline of 4.6%. The recession deepened to -7.5% in November and -7% in December - the sharpest declines since the 2002 collapse.

December data, in turn, show an outright collapse in retail/wholesale trade (-15.7%), manufacturing (-14.2%), and construction (-12.7%).

Recurring recession

This is the second recession since President Mauricio Macri took office, and as of December, GDP was 4.6% below November 2015 levels - when Macri was narrowly elected promising to spark growth with deregulation and tax cuts.

But three sharp devaluations and utility hikes of 3000% have hampered the economy and caused already high inflation rates to double to 47.6% last year - with real wages falling 17% since 2015.

The current crisis began after the collapse of a $60 billion carry-trade debt bubble known in Argentina as the "financial bicycle."

High-interest (50%) notes are still being issued to local banks to shore up the peso, costing the treasury $28 million in interest outlays daily.

From plaudits to bailout

Costly corporate tax cuts have meanwhile failed to spur investment or exports, and $61 billion has instead left the country since Macri took office.

Macri resorted to foreign borrowing to cover said losses, doubling Argentina's public foreign debt to $175 billion.

The ensuing crisis forced Macri to borrow $29 billion from the IMF since June 22 - part of a $57 billion bailout agreed to with the IMF in exchange for deep budget cuts which opponents see as both unconstitutional and recessionary.

The IMF - vocal supporters of Macri throughout his tenure - is expected to approve another $10.7 billion loan this March despite a 2018 budget deficit of 743 billion pesos ($26 billion), or 5% of GDP.

During a monitoring mission to Buenos Aires last week, IMF South America division head Roberto Cardarelli reportedly admitted in private that his "sole mission was to help guarantee Macri's re-election, at Washington's request."

At: https://translate.google.com/translate?hl=en&tab=wT&sl=auto&tl=en&u=https%3A%2F%2Fwww.pagina12.com.ar%2F177666-la-economia-sigue-en-rojo

Argentine President Mauricio Macri entertains IMF director Christine Lagarde and IMF South America head Roberto Cardarelli (second from right) during a recent visit.

Cardarelli reportedly admitted in private that the IMF bailout is "unsustainable" and that his "sole mission was to help guarantee Macri's re-election, at Washington's request."

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Reply Argentina's Macrisis: GDP falls 2.6% in 2018; 7% in December (Original post)
sandensea Feb 2019 OP
Judi Lynn Feb 2019 #1

Response to sandensea (Original post)

Thu Feb 28, 2019, 04:18 AM

1. Very simple statement from Cardarelli. ".... at Washington's request."

Christine must think she's looking at the IMF's best friend, or fool. He has sold out the country, bigly.

What has happened to Argentina is so far beyond catastrophic. How on earth can they ever recover in the lifetimes of anyone living there now?

Mind-blowing information tonight, sandensea.

It is good, however, seeing someone like Cardarelli has stepped forward to point a finger. Good for him.

Thank you, very much.

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