By Jeffrey T. Lewis
Argentina's gross domestic product expanded in the third quarter from the second quarter as the economy began to recover from the social-distancing measures that shut down many non-essential businesses earlier in the coronavirus pandemic.
GDP increased a seasonally adjusted 12.8% in the three months through September, and contracted 10.2% from the third quarter of 2019, Argentine statistics agency Indec said Thursday. The economy contracted a revised 16% in the second quarter from the first quarter and contracted a revised 19% from a year earlier.
The growth in the quarter still left Argentina's GDP below where it was before the coronavirus health crisis, which slammed economies around the world. The pattern of a sharp contraction in the second quarter followed by a jump in growth in the third quarter has occurred in many countries and doesn't indicate an improvement in Argentina's situation, according to Alberto Ramos, an economist at Goldman Sachs.
"Argentina has been in recession for three years and the economy is still showing large imbalances," he said.
The government of President Alberto Fernandez, which took office in Dec. 2019, has imposed price controls and capital controls as part of an effort to hold on to scarce dollars and get inflation under control. Those measures have undermined markets' confidence in the country even after the government successfully restructured billions of dollars in debt earlier this year.
Argentina's economy is likely to expand in the fourth quarter from the third quarter, as it continues to recover from measures that shut down businesses, but still faces challenges before returning to healthy growth, Mr. Ramos said. "There's still some fuel in the tank for the economy as more restrictions are removed, but the rebound will lose steam," he said. "Now the government needs to focus on growth that comes from confidence, from investment, from better policies."
Private spending rose 10.2% in the quarter and contracted 14.7% from a year earlier, while government spending expanded 2.7% from the second quarter and shrank 6.5% compared with the third quarter of 2019, according to Indec.
Gross capital formation, a measure of investment, jumped 42.9% in the third quarter but declined 10.3% from a year earlier. Exports contracted 1.4% in the quarter and declined 17% from the same quarter last year, while imports rose 10.9% in the third quarter and shrank 22% from a year earlier.
Write to Jeffrey T. Lewis at jeffrey.lewis@wsj.com
(END) Dow Jones Newswires
12-16-20 1434ET
