Argentina's Economic Activity Plummets Amid Austerity Measures

Argentina's economic activity fell 8.4% in March compared to the previous year, marking the steepest decline since 2020. President Javier Milei's cost-cutting policies are aimed at combating poverty and inflation, but have led to significant declines in key sectors like construction and manufacturing.

Argentina's economic activity fell 8.4% in March from a year earlier, the country's official statistics agency said on Wednesday, its fifth monthly drop in a row and the steepest fall since 2020.

The result was a steeper drop than the 6.9% fall estimated by market analysts in a Reuters poll, underscoring the impact of libertarian President Javier Milei's cost-cutting policies since taking office in December. Milei has embarked on a painful austerity drive in an effort to bring down rising poverty and annual inflation near 300%.

Nine sectors recorded declines in the year-on-year comparison, led by construction that posted a 29.9% decline and the manufacturing industry which slipped 19.6%, according to the data published by Argentina's INDEC statistics agency. Economic activity numbers are seen as a useful early indicator of likely gross domestic product (GDP) results.

The fall in activity in March follows year-on-year declines of 3.0% in February and 4.1% in January. In the year through March, Argentina's economic activity fell 5.3%.