Economic activity after the 2015 recession
The country’s economic issues, including high inflation and a fiscal deficit, led to a recession in mid-2015. The aftershocks from the recession still affected Argentina’s economy (FRN) in 1Q17. The chart below shows Argentina’s economic activity in the past year through May 2017.
Economic activity in 2017
The leading economic index in Argentina rose 3.0% in May 2017 compared to 0.70% in April 2017. The index currently stands at 151 points. Its base value of 100 was set in January 1993.
According to a report from Universidad Torcuato Di Tella, the probability that Argentina could fall into a recession fell to 9% in May 2017 compared to 12% in April 2017.
The economic index picked up in May 2017, mostly driven by expansion in the financial, construction, and agricultural sectors. The only exception was the decline in rubber and plastic production.
President Mauricio Macri’s efforts over the last year resulted in a number of reforms to improve the country’s economic stability and credibility. As a result, Argentina’s economy moved to positive growth territory in the second half of 2016. According to the IMF report, the country’s GDP growth in 2017 is expected to grow 3%, driven by higher exports and investments.
The Global X MSCI Argentina ETF (ARGT), tracking the largest and most liquid securities with exposure to Argentina, gained about 6% in May 2017. The fund allocates more than 65% to the energy, information technology, and financial sectors. The top holdings of ARGT include Tenaris (TS), MercadoLibre (MELI), and YPF (YPF).