Argentina Economy Expanded at Slowest Pace Since 2003

18 Dic
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Dec. 18 (Bloomberg) — Argentina’s economy grew at the slowest pace in more than five years in the third quarter as the onset of the global financial crisis trimmed consumption in South America’s second-biggest economy.

Gross domestic consumption expanded 6.5 percent, the smallest gain since the first quarter of 2003, the national statistics institute said today in a report in Buenos Aires. The economic outlook for the country is worsening rapidly as the international crisis unfolds, said economist Jose Luis Espert.

"The country is already in recession," said Espert, who runs an economic consulting company in Buenos Aires. "We’re forecasting a decline of 3 percent this quarter."

President Cristina Fernandez de Kirchner is seeking to counter the slowdown with a stimulus package to boost spending on public works and fuel consumption of goods including cars and refrigerators. Argentina’s last recession was in 2002, after the country defaulted on $95 billion of bonds.

"The measures announced by the president have more to do with public relations than with helping the economy," Espert said in a telephone interview.

Consumer confidence fell 5.3 percent in December from last month and 28 percent from the same month a year earlier, according to a poll released today by Torcuato Di Tella University in Buenos Aires. Automakers cut production 28 percent in November from a year earlier and domestic vehicle sales fell 26 percent from the previous month. Industrial output in November rose 2.6 percent from a year earlier, the lowest rate since June.

Fernandez’s 2009 budget forecasts growth of 4 percent next year. The economy will shrink by 0.9 percent in 2009, according to a Bloomberg survey of six economists.

To contact the reporters on this story: Bill Faries in Buenos Aires at wfaries@bloomberg.net; Silvia Martinez in Buenos Aires at smartinez19@bloomberg.net.

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