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By Hernan Nessi<\/p>\n
BUENOS AIRES (Reuters) – Argentina’s battered economy is expected to plateau and begin a fluctuating recovery in the second half of the year, according to forecasts by analysts and economists.<\/p>\n
Argentine economic activity has sharply declined since the end of last year, a consequence of a crisis inherited by libertarian President Javier Milei, who took office in December and is pushing a harsh austerity program coupled with deregulation of the economy.<\/p>\n
While Milei’s policies have balanced public accounts and appear to be slowly cooling an inflation rate of around 280%, among the world’s highest, consumption has collapsed and economic contraction has pushed half the population into poverty.<\/p>\n
Empiria Consultores economist Federico Rouco said that unless there is some major disruption from the exchange rate, economic contraction should taper out.<\/p>\n
“What is coming appears to be a slow recovery, a sticky floor,” he said.<\/p>\n
Rouco noted that barring the agriculture and mining industries, the economy shrunk 6.7% in the first four months of the year: “Real wages and employment are falling and it will take time for them to return to previous levels.”<\/p>\n
Rouco added that the sectors most important to revitalizing the economy were among the worst hit.<\/p>\n
The construction sector was especially hit by lost public spending and the government halting projects that were far from completion.<\/p>\n
Construya, an association which groups 12 large construction firms, said its index of private sector sales volumes, while recovering 10% month-on-month in June in seasonally adjusted terms, had collapsed 32% compared to a year earlier.<\/p>\n
“We are seeing a gradual improvement after several months of deep contraction. We see this as a positive trend,” Construya said in a statement.<\/p>\n
Analysts consulted by Reuters predict that economic activity will begin to edge up very slowly from the second half of 2024.<\/p>\n
Fundacion Libertad y Progreso’s chief economist Eugenio Mari said he expects May’s economic activity indicator, known as EMAE, to grow month-on-month though it should still mark a decline compared to a year earlier.<\/p>\n
“There will still be some months left until the economy returns to levels seen in the first half of 2023,” he said. “Several indicators suggest a change in trends, but we are still far from a strong recovery,” he said.<\/p>\n
(Reporting by Hernan Nessi; Writing by Sarah Morland; Editing by Alistair Bell)<\/p>\n<\/div>\n