Tags: Argentina | Recession | Doubts | Data

Argentina Says Q2 GDP Shows Recession Over as Doubts Raised Over Data

Thursday, 25 Sep 2014 02:12 AM

Argentina said on Wednesday its economy pulled out of recession in the second quarter, raising doubts over the reliability of data as the government battles to ease the impact of its sovereign debt default.

The Indec statistics agency reported gross domestic product grew 0.9 percent in the second quarter from the first quarter, while economists had broadly predicted a third consecutive quarterly contraction.

The statistics agency revised the quarter-on-quarter figure in the first three months of the year to -0.5 percent from a previously reported -0.8 percent.

Latin America's third-largest economy slid into recession at the start of the year on declines in industrial output and private consumption after a decade of mostly stellar growth. July's sovereign bond default has heightened uncertainty.

The latest GDP data is likely to be hailed as good news by the leftist government, which has ramped up state interventions in the economy since the July default in an attempt to bolster anemic consumer demand and defend its dwindling foreign reserves.

But tougher controls on trade and the currency market are exacerbating economic imbalances and battering consumer and business confidence. Economists predict the first full-year recession in Latin America's No. 3 economy in over a decade.

"I believe in real terms the third quarter will be much worse," said Fausto Spotorno, an economist at local consultancy Orlando Ferreres and Associates who had forecast a second quarter contraction of 0.8 percent.

"I have no more confidence in the numbers," he said.

The soybean and corn harvests, which peak in the second quarter, will have given a fillip to economic activity between April and June. Even so, analysts say, other indicators point to the $490 billion economy's ill-health.

Exports fell 7.4 percent in the second quarter, Indec said, hurt by weakness in Brazil, Argentina's main trading partner.

Private consumption fell 2.5 percent, underscoring the decline in consumer spending as the peso currency falls through the floor and inflation races towards 40 percent, according to private estimates.

Buenos Aires-based economic consultant Federico Thomsen said he expected the economy to shrink 2.5 percent this year, while Spotorno estimated a 2 percent contraction - both in stark contrast to the government's own estimate of 0.5 percent growth.

© 2017 Thomson/Reuters. All rights reserved.

   
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Argentina said on Wednesday its economy pulled out of recession in the second quarter, raising doubts over the reliability of data as the government battles to ease the impact of its sovereign debt default.
Argentina, Recession, Doubts, Data
366
2014-12-25
Thursday, 25 Sep 2014 02:12 AM
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