The
decrease in economic activity in Argentina is recorded as the country
applies IMF-sponsored austerity policies.
Argentina’s
Statistics and Census agency, the Indec, announced Tuesday that
economic activity contracted by 5.8 percent this May in comparison to
the same month last year.
The
report published by Indec also revealed economic activity decreased
by 1.4 percent in comparison to April.
Reuters
had projected an interannual contraction of 1.8 percent for May, and
economic contraction is expected to deepen. Marco Peña, President
Mauricio Macri’s chief of staff, said Tuesday “the next months
will me more recessive, cold and stormy.”
According
to analysts the contraction is due primarily to the drought that
affected the country’s agricultural sector, which has an economic
contraction of 35.2 percent, fishing with a drop of 29.2 percent and
transport and communications with 4.9 percent contraction.
However
another important source of the contraction is a decrease in internal
demand, which has been affected by rising unemployment, inflation and
currency depreciation. A reduction on internal demand mainly affects
industrial growth.
Since
Macri assumed the office of the presidency over 73,000 people have
been layed off in the public and private sectors.
The
manufacturing industry registered its first drop since April 2017,
especially in the textile, chemistry, metalworking, oil, plastics and
food sectors.
The
construction sector grew by 4.4 percent, which is below the 12.4
percent accumulated growth for 2018. According to Economist and
Pagina 12 journalist Javier Lewkowicz, deceleration responds to a cut
back in public works, which is expected to continue due to the
government’s austerity policies.
According
to Lewkowicz “a worse result in economic growth is negatively
impacting the Federal Administration of Public Income through
Value-added taxes, debits, credits and income taxes. That means the
government will need to intensify fiscal austerity.”
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