Argentina’s economic activity plummets 8.4 per cent in March, the steepest drop since 2020

Argentina's economic activity fell by 8.4 per cent in March compared to the previous year, according to the country's official statistics agency, INDEC. This is the sixth consecutive monthly loss and the biggest reduction since 2020.

According to a Reuters poll, the March dip surpassed market estimates of a 6.9 per cent drop. The sharper-than-expected contraction demonstrates the major impact of libertarian President Javier Milei's strict cost-cutting policies since his administration began in December. Milei has implemented a stringent austerity program aimed at reducing skyrocketing poverty and lowering an annual inflation rate approaching 300 per cent.

According to INDEC data, nine industries had year-on-year reductions, with construction falling 29.9 per cent and the manufacturing industry losing 19.6 per cent. These sectors were the most severely damaged, contributing significantly to the overall drop in economic activity.

Economic activity numbers are regarded as an early indicator of future GDP developments. The March reduction comes after year-on-year drops of 3.0 per cent in February and 4.1 per cent in January, indicating a continuing downward trend.

Argentina's economic activity fell by 5.3 per cent overall in the fiscal year ended March. The protracted economic downturn highlights the difficulty that President Milei's administration faces as it attempts to stabilise the nation's economy under tough fiscal reforms.

(With inputs from Reuters)