By Hernan Nessi

BUENOS AIRES (Reuters) – Argentina’s economic activity likely dropped 5.5% in January on an annual basis, a Reuters analyst poll showed on Monday, which would represent a sharp decline in the first full month of data since President Javier Milei took office on Dec. 10.

The 14 local and foreign analysts surveyed by Reuters also forecast the EMAE economic activity index to have slipped 5.3% in January when compared with the previous month.

The declining economic activity follows the libertarian Milei’s move to devalue the local peso currency by more than 50% while slashing state spending to reverse a deep fiscal deficit, part of his “shock therapy” to begin to get Argentina out of a major economic crisis.

Economic activity numbers are seen as a useful early indicator of likely gross domestic product (GDP) results.

Statistics agency INDEC is expected to publish the official figures on Tuesday.

The EMAE index, according to INDEC, had already registered a 4.5% year-on-year drop in December, the month Milei took office, after also sliding 0.9% in November.

“The government’s plan, in an environment of currency shortage, will have recessive effects in the first months of 2024, and the numbers will only improve when the bulk of the (grain) harvest begins,” according to consulting firm Orlando Ferreres & Asociados.

“With the exception of agriculture and mining, the rest of the relevant sectors are showing very considerable year-on-year declines, and the short-term prospects are not very encouraging.”

(Reporting by Hernan Nessi; Editing by Chizu Nomiyama)

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