Country Economic Forecasts > Argentina

After a major overhaul of INDEC by the new government, that took almost seven months, the new statistical set-up has released GDP growth figures for early 2016. It has also revised the data for the past eleven years, downgrading the scale of expansion over that period.In Q1 2016 year-on-year GDP growth was +0.5%, stronger than we had expected. But although the economy has probably passed through its weakest phase now, it seems likely that the contraction in Q2 when many previously subsidized prices were being raised was much more severe than we first forecast. Indeed, with real wages suffering a big squeeze as rises in salaries lagged behind those of prices, consumer spending is likely to shrink by 2.2% this year. And as private consumption accounts for two-thirds of GDP, then it seems likely that overall activity will contract. We have cut our 2016 GDP growth forecast from +0.3% previously to -0.4% now.However, better days will be coming soon, and we expect the economy to grow by 2.8% in 2017 and by 3.4% in 2018.