Argentine boom may be coming to an end
TOKYO - Agence France-PresseArgentina’s nine-year economic expansion appears to be slowing sharply, according to analysts, who predict growth of 2.5 percent to 3 percent this year, half the 5.1 percent projected by the government’s 2012 budget and down sharply from last year’s 8.9 percent rise.
Some economists are even predicting recession before year’s end. “The tail wind has ended and there are storm clouds gathering. Argentina is more exposed,” said Ramiro Castineira, an economist with the Econometrica consultancy. He estimates 2.5 percent growth this year.
Argentina’s GDP averaged annual growth of 7.1 percent from 2003 to 2011 as President Cristina Fernandez and her late husband and predecessor, Nestor Kirchner, guided the country out of an economic abyss created by its world-record loan default and currency devaluation in 2002.A wide range of factors is involved in the slowdown. Agricultural production dropped sharply due to low rains this past growing season. Industrial production also dropped despite high internal demand because trade protections make it more difficult to get parts for everything from smartphones to refrigerators to automobiles. Brazil, meanwhile, has been devaluing its currency as its economy slows, making Argentine exports to its main trading partner less competitive.
Construction is usually a main economic driver, and Argentines habitually turn to real estate as a way to shelter their wealth against inflation. But new projects have slowed sharply as sales plunged 15 percent this year, due in large part to currency controls imposed by the government to stem capital flight. Nearly all Argentine real estate transactions are done in dollars, which are now scarce as people try to dump their pesos and move their wealth out of the country. For the first time in years, Argentina is now spending more than it takes in, closing 2011 with a budget deficit of 1.6 percent, according to official data.