Argentina's economy craters in the 2nd quarter as an economic crisis grips the country
- Argentina's gross domestic product fell 4.2% in the second quarter from a year earlier.
- Argentina was hit by a severe drought that has weighed on exports.
- The government is pursuing austerity measures to shore up public financing.
Argentina's economy contracted sharply in the second quarter after a severe drought roiled agricultural production and as the country works with the International Monetary Fund to stem a spiraling economic crisis.
Gross domestic product fell 4.2% between April and June from a year earlier, the national statistics agency said in a report, marking its first contraction in more than a year. One of the worst droughts in years helped drive a steep decline in exports from the country, a top seller of soy and corn in the world market.
"The economy will contract further in upcoming months amid tightening monetary and fiscal conditions, though the expected rebound in agricultural output will prevent a deeper contraction," the ratings agency Moody's said in a statement.
President Mauricio Macri asked the International Monetary Fund last month to speed up payments that are part of a historic bailout deal reached in June. The IMF has so far extended $15 billion to the country and was expected to disburse an additional $3 billion in September.
Also on Wednesday, the Economy Ministry said Argentina's primary fiscal deficit stood at $10.4 million in August, down about 58% from the same month last year.
Argentina has been pursuing sweeping austerity measures in efforts to shore up public finances. President Mauricio Macri and Finance Minister Nicolas Dujovne rolled out a series of economic reforms earlier this month, including stiff spending cuts and export tax increases.
The central bank raised its benchmark interest rate to 60% in August after the peso, which has shed about half of its value this year and is the worst-performing currency of 2018, continued to sell off.