Economy

Argentina sees its economy shrink 4.3% in the last quarter of 2020

The quarterly decline was far milder than the 10.2% third-quarter collapse and a record contraction of a revised 19.1% in the 2020 second quarter, the toughest point of the COVID-19 restrictions in the country

A woman shops at a store that sells Catholic religious items outside the church of San Cayetano (Saint Cajetan), the patron saint of labour and bread, during his feast day, amid the coronavirus disease outbreak, in Buenos Aires, Argentina August 7, 2020. Photo: REUTERS/Agustin Marcarian
A woman shops at a store that sells Catholic religious items outside the church of San Cayetano (Saint Cajetan), the patron saint of labour and bread, during his feast day, amid the coronavirus disease outbreak, in Buenos Aires, Argentina August 7, 2020. Photo: REUTERS/Agustin Marcarian

Argentina‘s economy contracted 4.3% year-on-year in the fourth quarter of 2020, the smallest decline in a year and slightly better than analysts had predicted, as the country looks to rebound from the COVID-19 pandemic‘s impact.

The INDEC statistics agency said on Tuesday the grain producer’s economy reversed 9.9% for the full year when it was hit hard by the pandemic, cementing a third straight year of recession.

The quarterly decline was far milder than the 10.2% third-quarter collapse and a record contraction of a revised 19.1% in the 2020 second quarter, the toughest point of the COVID-19 restrictions in the country.

READ ALSO: Brazilian state-owned companies are included in the privatization program

A Reuters poll of analysts had forecast the economy would tumble 9.9% for the year and 4.4% in the final quarter, almost exactly on the mark.

“The end of last year was encouraging in terms of activity,” said Matias Rajnerman, chief economist at consultancy Ecolatina. Seasonally adjusted growth had been consistent recently even with some pandemic restrictions still in place, Rajnerman added.

“The outlook for 2021 is encouraging. It will depend on the coronavirus cases and what lockdowns are needed whether that can be transformed into reality.”

READ ALSO: COVID-19 forces Bolivians who work for daily cash in hand to be creative in overcoming the economic crisis

Pablo Besme, economist at consultancy Invenómica, said the positive growth outlook in coming months was a bright spot amid tough currency controls, high inflation and low investment, though the longer term still looked uncertain.

“(The positive numbers) will be unsustainable beyond 2021,” he said, adding that Argentina’s economic and debt issues had led to a “decoupling” with the global economy.

The analysts polled by Reuters had predicted a fourth-quarter contraction ranging from 4.1% to 4.6%. The government and economists forecast a 5% to 7% economic rebound this year, which should start to be seen from the second quarter.

Get the best insights about Latin America market in your inbox