August 23, 2018 / 8:28 PM / a year ago

UPDATE 1-Argentina economic activity shrinks 6.7 pct in June yr/yr

(Updates with historic statistics, comments from economists)

By Scott Squires

BUENOS AIRES, Aug 23 (Reuters) - Argentina’s economy contracted 6.7 percent in June compared with the same month last year, government statistics agency Indec said on Thursday, the latest indication the South American country is headed toward a recession.

That marked the third straight month of year-on-year declines, and the largest year-on-year decrease the country has seen since July 2009. The economy also contracted 1.3 percent in June compared with May, and was down a cumulative 0.6 percent in the first six months of the year compared to the same period in 2017, Indec said.

“We now expect the economy to contract between one percent and two percent in 2018,” Goldman Sachs economist Alberto Ramos said in a note.

June’s poor performance came after a run on the peso currency prompted the country to ink a $50 billion financing deal with the International Monetary Fund (IMF).

The economic decline was caused in part by a drought that ravaged Argentina’s agriculture sector in early 2018. Agricultural output plummeted 31 percent in June, manufacturing was down 7.5 percent, and retail and wholesale commerce fell 8.4 percent. (Reporting by Scott Squires; Editing by Luc Cohen and Sandra Maler)

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