(Bloomberg) -- Argentina’s economy expanded in August despite a steep currency devaluation that unleashed price spirals not seen in three decades.
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Economic activity grew 1.3% in August from a month earlier, according to government data published Tuesday. From a year earlier, the gross domestic product proxy rose 0.3%, compared with economists’ median estimate for a 2.2% decline.
The upset victory of outsider Javier Milei in mid-August’s presidential primary election sent the country’s peso, bonds and stocks into free fall and prompted the incumbent government to devalue the official currency 18% and raise the key interest rate 21 percentage points. Monthly inflation in August accelerated 12.4%, a level not seen since Argentina was exiting hyperinflation in the early 1990s.
A general election Sunday saw Economy Minister Sergio Massa replace Milei on top, making for a worst-case scenario for markets ahead of the November runoff. The next government is expected to inherit a recession coupled with triple-digit inflation.
Argentina’s gross domestic product slumped 2.8% in the second quarter, the deepest decline since the peak of the pandemic in early 2020. A record drought that wiped out $20 billion of agriculture exports and accelerated food inflation took a heavy toll on the economy. Economists surveyed by the central bank see GDP declining 2.8% this year and contracting again in 2024.
--With assistance from Rafael Gayol.
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