Country Economic Forecasts > Argentina

It took longer than expected, but the recession seems now to be over. According to the GDP proxy, the Argentine economy expanded by 0.2% m/m in August after four consecutive monthly falls. Real bank credit has stopped falling, while the construction sector is also starting to recover on the back of public works being reactivated. Finally, the weakness in retail sales now seems to be moderating, and declining inflationary pressure coupled with improving consumer sentiment should secure a recovery in this area of the economy in the coming months. After shrinking by 1.2% this year, the economy is expected to rebound to 3.6% growth in 2017, boosted by a recovery in real salaries, increased FDI inflows and a pick-up in Brazil, the country's biggest trade partner.However, some old challenges persist. With mid-term elections due next year, the government will take a more gradual approach on its fiscal consolidation plan. Indeed, it has recently increased its primary deficit target for 2017. But given the country's bad track-record on this front, foreign investors may not be prepared to give President Macri the benefit of the doubt for another year.