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Argentina's GDP disappoints in the first half, and pessimism grows for 2023

Argentina’s Gross Domestic Product (GDP) accumulated a growth of 6.5% in the first half of this year, below the pace of expansion in 2021, and may step on the brakes even more in the second half, paving the way for forecasts of a clear deceleration to 2023.

According to the National Institute of Statistics and Censuses (Indec), Argentine GDP grew by 6.9 % in the comparison between the second quarter of last year and that of 2022, thus marking a sequence of six consecutive quarters of increase.

In the first half, Argentina’s GDP recorded an increase of 6.5%, well below the recovery of 10,5% achieved in the first half of 2021.

After this performance in the first semester, the Argentine economy, marked for years by strong imbalances, entered the second semester with the left foot.

At the end of June, market distrust and greater restrictions on imports in an attempt to contain the depletion of reservesof the Central Bank caused a financial shock.

In July, amid growing tensions within the governing coalition, there were successive changes in the command of the Ministry of Economy, until the arrival of Sergio Massa, at the beginning of August.

In the process, Argentina’s already high inflation accelerated sharply, and parallel dollar quotations jumped sharply, affecting production, consumption and investment decisions.

Massa’s arrival and his moderate speech in favor of maintaining the course of economic reorganization outlined in the agreement made in March with the International Monetary Fund (IMF) managed to reduce tensions, although imbalances persist, and their harmful effects are being felt on performance. economy in the second half of the year.

According to the government’s own projections in the 2023 budget presented last week, GDP will end this year with a growth of 4%, as well below the recovery of 10,4% achieved in 2021, after three years of severe recession.

The private economists that the Central Bank consults monthly for its report on expectations predict that next year the Argentine economy will grow only 1%.

The official projection included in the 2023 Budget is a little more optimistic, with an increase of 2%.

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