Argentina’s GDP fell -4.03% q/q (in seasonally-adjusted terms) in Q2, which was broadly aligned with expectations, after a +0.8% growth in Q1. Compared to the same quarter last year, the economy contracted -4.2% y/y after growing +3.9% in Q1 (in non-seasonally-adjusted terms). Private consumption declined -1.1% q/q while exports were the hardest hit (-14.2%) due to the exceptionally bad crop harvest after the worst drought in several decades. The drop in investment (-6.9% q/q) follows high economic policy uncertainty starting early May. Going forward, while the effect of the draught should dissipate, private consumption will continue to weaken as the ARS depreciated further in Q3 so far (-37% vs. the USD) and as inflation is expected to end the year close to +40% (against +25% in January), hurting purchasing power. We expect a contraction of activity of -3% this year, which is a bit more pessimistic than the consensus (-2.4%). Indeed, we expect tighter fiscal consolidation, the huge interest rate shock and policy uncertainty to add to the inflation and currency depreciation plagues.