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Argentine Economy Grew 2% in April From Year Earlier (Update1)
Bloomberg
June 23, 2009

By Eliana Raszewski and Silvia Martinez

June 23 (Bloomberg) -- Argentina's economic growth slowed in April from March, providing more evidence that the economy may shrink in 2009 for the first time in seven years.

Gross domestic product expanded 2 percent from a year earlier, down from an annual growth rate of 2.4 percent in March, the National Statistics Institute reported in Buenos Aires. The economy grew 1.3 percent from March, the agency said.

President Cristina Fernandez de Kirchner is seeking to prevent the economy from contracting this year, allocating 111 billion pesos ($29 billion) for a stimulus package to boost public works and fuel spending. She also tapped part of the $24 billion in pension funds nationalized last year to offer low- cost mortgages, spur construction and encourage purchases of goods ranging from washing machines to cars.

South America's second-biggest economy, which has expanded at least 6.8 percent a year since 2003, will contract 1.9 percent in 2009, said Bertrand Delgado, senior Latin America economist at RGE Monitor in New York. The economy will suffer from a decline in consumption, investment spending and a reduction in agricultural output because of a drought.

"Although the government has tried to boost the economy ahead of the next mid-term elections, confidence hasn't improved," Delgado said in a telephone interview.

First Quarter

Delgado estimates that the economy shrank 2 percent in the first quarter, compared with a 2 percent growth that the statistics agency reported on June 18. He and other private economists have raised doubts about the accuracy of the official statistics since former President Nestor Kirchner shuffled personnel at the statistics agency in January 2007. Both Kirchner and Fernandez have supported the agency's reports.

"We are going to keep growing in Argentina and in no way are we going to enter a recession," Fernandez said on May 15 in Buenos Aires.

Carlos Gagliardi, president of the Federation of Home Appliances Retailers, said sales plunged 27 percent in May from a year earlier after falling about 15 percent in the previous months. Uncertainty about the outcome of the June 28 mid-term election has led consumers to delay investments, he said.

"People don't have confidence and they are trying to keep spending tight," said Gagliardi, 58, who owns an appliance store in Santa Fe province. "Those who have the money to buy want to wait and see what will happen after the elections."

To contact the reporter on this story: Eliana Raszewski in Buenos Aires at eraszewski@bloomberg.net

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