Argentina's economic activity seen up 3.3% July, a sharp slowdown: Reuters poll

Argentina's economic activity (EMAE) is projected to have significantly slowed in July, with a Reuters poll of analysts forecasting a median 3.3% year-on-year growth, a sharp deceleration from June's 6.4%. This slowdown is deemed "not encouraging" by consulting firms, noting a seasonally adjusted contraction and concerns for economic expansion into 2025, particularly due to a contraction in the manufacturing sector, including food and automotive industries. Official EMAE data for July is scheduled for release later this week.

Analysis

Argentina's economic activity is projected to have slowed significantly in July, with a median forecast from a Reuters poll indicating 3.3% year-over-year growth, a sharp deceleration from the 6.4% expansion recorded in June. This outlook is viewed as "not encouraging" by consulting firm Orlando Ferreres & Asociados (OJF), which highlighted a contraction in the seasonally adjusted series and noted that activity levels remain only marginally above those of December, signaling challenges for economic expansion into 2025. The slowdown is reportedly driven by a contraction in the manufacturing sector, with particularly poor performance in the key food and automotive industries. While the official data from the national statistics institute (INDEC) is pending, the wide range of analyst estimates, from 1.7% to 5.0%, introduces a degree of uncertainty around the final figure.

Key Decisions for Investors

• Investors with exposure to Argentine assets should prepare for potential negative price action, as the forecasted economic slowdown to 3.3% YoY growth from 6.4% in June suggests a weakening macroeconomic environment.
• Given the specific mention of contraction in manufacturing, it is prudent to review holdings in Argentine industrial, automotive, and food-related equities for heightened downside risk.
• The official EMAE data release on Wednesday is a key catalyst; a figure below the 3.3% consensus could exacerbate negative sentiment, while a significant beat could provide a short-term relief rally.
• The commentary suggesting stagnant expansion into 2025 warrants a cautious, and potentially underweight, strategic allocation to Argentina until clearer signs of a sustained recovery emerge.