Argentina’s GDP rose 10.3%, the biggest advance in 17 years

Following in the footsteps of its Latin American neighbors, Argentina saw its economy grow by 10.3% last year but continues to struggle against inflation.

A woman buys sweets at a store in Buenos Aires, Argentina, on 01/11/2022. Photo: REUTERS/Agustin Marcarian/ File photo.
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Argentina’s economy grew 10.3% last year, slightly above forecasts, as did the unemployment rate, which fell, and the South American country’s trade indicators, which also showed a reaction.

The government said growth in 2021, above the forecast of 10%, was the highest in at least 17 years, driven by the easing of restrictions imposed during the COVID-19 pandemic. “This is the biggest growth since the series started in 2004, surpassing the previous biggest variation, registered in 2010”, said the Ministry of Economy in a statement.

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The economy grew 8.6% in the last quarter of the year compared to the same period in 2020.

The official statistics agency said the unemployment rate fell to 7% in the fourth quarter of 2021, well below market expectations of 8.5%. It was the lowest reading since 2015.

Argentina, a major grain producer, is struggling with low foreign exchange reserves, rampant inflation above 50%, and a currency crisis that has forced the country to impose tight capital controls.

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Also, on Tuesday night (22), the Argentine Central Bank raised the country’s benchmarking interest rate by two percentage points, to 44.5%, the third increase this year. The monetary authority said it will seek to place the reference rate on the path of “positive real returns on investments in local currency and preserve monetary and exchange rate stability,” indicating higher rates with inflation above 52%.

Controlling inflation is a critical point in the country’s debt renegotiation with the International Monetary Fund (IMF), whose board is due to meet on Friday (25) for the final approval of the agreement approved by the Argentine Senate last week.

Translated by LABS

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