Amid record drought, Argentina's GDP slips 1.6% in 2023
Argentina's INDEC statistics bureau reported that the nation's economy declined by 1.6% in 2023, after two years of strong growth averaging 7.8%.
The Argentine economy, the third-largest in Latin America, fell 4.5% in December however - as shock policies decreed by newly-elected far-right President Javier Milei began to take effect.
High inflation - a fixture of the Argentine economy for most of the past 80 years - was pushed up sharply by a massive, 118% devaluation enacted by Milei within days of taking office, with consumer prices up 211% (by far the highest since 1990).
Prices jumped by 25.5% in December alone - tripling the average 8.3% pace in the 12 months to November.
But annual GDP was still up 3.1% from 2019 levels - after a foreign debt bubble under former President Mauricio Macri collapsed in April 2018, leading to a two-year “Macrisis.“
Mining boom, farming woes
Sectors reporting growth in 2023 were led by mining and extraction (7.3%), as long-declining oil output rose for a third year running by 9% to its highest level since 2007 and gas output rose 6.9%.
Lithium - which in 2022 became Argentina's top mineral export - enjoyed a record US$882 million in exports (up 26.7%) despite a 32.5% drop in prices last year.
Tourism continued its recovery from the 2020 pandemic lows, growing 5.6% for the year. The number of foreign visitors rose 86.7% to a record 6.77 million (excluding day trips) - more than compensating for a 2.6% lull in domestic tourism.
Retail and wholesale were flat - with the sector falling 8.5% in December. Argentina's Medium Business Federation (CAME) reported a 13.7% real decline for reporting small and medium retailers that month.
Inflation impacted real wages, which fell 4.9% in 2023 - but 18.9% in December.
Job growth nevertheless remained strong until October, with 421,000 net registered new jobs created over the previous 12 months (equivalent to 3 million in the U.S.) and unemployment, at 5.4%, the lowest since 1986.
Manufacturing slowed by 2% - though auto and light truck output rose 13.7% to 611,000 on strong domestic sales (which, like most sectors, entered a recession in December).
Fixed investment likewise slid 2% according to Orlando Ferreres, a top local macroeconomy consultant - mostly due to a 16.7% plunge in December, with machinery and equipment outlays crashing by 26%.
Agriculture fell 20.4% amid the worst drought in over a century - though beef output rose 4.3% on strong domestic demand.
Grain and oilseed harvests plunged by 34% to their lowest level since the 2012 drought, depriving central bank coffers of at least US$20 billion in foreign exchange.
As a result, exports - which had reached records in 2022 - fell 24.5% to $66.8 billion last year. Imports fell 9.6%, to $73.7 billion - reversing the nation's critical trade surplus to a $6.9 billion deficit.
The trade deficit might have been wider - but for tighter import restrictions imposed by then-Economy Minister Sergio Massa in 2022; Massa was the runner-up in elections last November.
The Argentine Catholic University’s respected Social Debt Observatory reported that income poverty jumped from 44.7% in the third quarter, to a shocking 57.4% by January - leading Massa's running mate, Agustín Rossi, to lament Wednesday that “Milei has more poor than votes” (55.7%).
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Argentina's state oil firm YPF opens a “station of the future” in Buenos Aires in January.
Growth in oil and gas output, as well as lithium, made mining and extraction one of the few bright spots in Argentina's economy last year.
The nation's recession - which until Javier Milei's election in November had been largely limited to the drought-stricken agricultural sector - pivoted to a widespread collapse in December and January after Milei's shock devaluation, with little hope for a recovery in the near term.
Milei has been largely ruling by decree, despite having most of his deregulatory proposals already rejected by congress and the courts.
