Due to the sharp fall of the agricultural sector due to the drought, in April economic activity decreased 0.9% in relation to the same month of 2017. And it decreased 2.7% in relation to last March, according to the estimator’s data monthly activity of the Indec.
It is the first productive decline after 13 months of consecutive year-on-year growth. It marks the beginning of the recession because, although the decline in April is explained by the drought that damaged the countryside, it intensified in May and during this month due to devaluation, the trigger of inflation, the shrinkage of public works and the fall in sales. It is expected to continue at least during the third quarter of the year.
With this setback, the economy that had been growing at 3.6% between January and March shrunk to 2.4% until April. For the next few months, the contraction is expected to continue and 2018 is expected to end with zero or close to zero growth.
The Letter of Intent to the IMF says that due to financial volatility, drought and rising energy prices, “we expect growth to be between 0.4 percent and 1.4 percent year-on-year this year” . The Government recognizes that there will be setbacks for the coming months.
Yesterday, the Chief of Staff, Marcos Peña was more explicit before journalists when saying that “it is probable, as our own people in charge of the economy have already said, that product of the external shocks that we have had and the exchange crisis, that will have an impact of some more recessive months “. However, he assured that despite everything “this year will end up growing anyway and next year we will resume the path of growth”.
The fall in the agricultural sector in April was very strong: 30.8%, after which it fell 3.8% year-on-year in March compared to the same months of 2017. This fall more than compensated for the better performance of the rest of the sectors , with the exception of transport and communications (-0.8%) and social and personal activities (-0.5%).
Sources from the Ministry of Finance estimated that excluding agriculture, the rest of the sectors had a growth of 3.3% compared to April 2017. Of the 15 sectors, 12 sectors showed inter-annual growth, they specified.
However, the consultant Orlando Ferreres (OJF) said that in May the fall in economic activity was 2.8% and the sectors that until last month helped to balance with the growth of the decline in agriculture showed a sharp slowdown, leading to the general index to the negative terrain.
“This was the case of construction, which showed an advance of just 2.1%, after averaging growth of more than 10% for the first four months of the year. This dynamic was reproduced in the sector of commerce and manufacturing industries, which recorded the first negative figures in the elapsed of 2018, “says the OJF Report.
The ACM Consultant also expects “a brake on the activity in the coming months due to the extension of the phenomenon of drought, the impact of the depreciation of the peso and cuts in public spending, specifically in public works, to meet fiscal targets. In this scenario, we revised our growth projections around 0.4% for 2018 with a second and third quarter negative in terms of growth and a recovery in the fourth. “