(Adds details from Indec report, Brazil recession)
BUENOS AIRES, Nov 30 (Reuters) - Argentina’s industrial production contracted 8.0 percent in October from the same month a year earlier, national statistics agency Indec said on Wednesday, marking the sharpest monthly drop in activity so far this year.
That was more than the median expectation of a 6.5 percent year-on-year decline in a Reuters poll and the ninth straight month of shrinking output, the latest in a string of indicators showing that the recession in Latin America’s No. 3 economy is lasting longer than the government initially forecast.
President Mauricio Macri has enacted a number of business-friendly reforms to attract investment and stimulate the inflation-plagued economy, but a promised rebound in the second half of 2016 has not yet materialized.
Cumulatively, Argentina’s industrial output for the first 10 months of 2016 has fallen 4.9 percent compared with the same period last year. The drop in October was primarily driven by a 26.7 percent decline in the textile industry and a 19.1 percent drop in the automotive industry.
A prolonged recession in neighboring Brazil, Argentina’s largest trading partner accounting for more than 15 percent of total exports, continues to weigh on the economy. Brazil said on Wednesday that its economy shrank 0.8 percent in the third quarter from the second quarter and 2.9 percent year-over-year.
Economists have cut 2017 growth forecasts for Brazil to around 1 percent amid disappointing economic performance since President Michel Temer took office in May, and some analysts do not rule out a third year of recession in what would be the country’s worst downturn ever.
Brazil accounts for nearly three-quarters of all Argentine automobile exports, and sales in units have fallen 33 percent in the first ten months of this year compared with the same period last year, Indec said on Wednesday.
Argentina’s economy is expected to drop between 1.5 and 2 percent this year, before rebounding to grow between 3 and 5 percent in 2017. Last week, government data showed economic activity shrank 3.7 percent in September versus a year earlier. (Reporting by Luc Cohen; Editing by James Dalgleish, Alistair Bell and Bill Rigby)