Recovery signals in Argentina

Wednesday, May 30th 2001 - 21:00 UTC

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Although the Argentine economy has began to show some tepid signals of recovery, it's still too early to consider it a consolidated tendency, according to local analysts. However analysts underline that the restructuring of 15 billion US dollars of foreign debt maturing in the next twelve months, has had a strong impact in consumer and local investment attitudes.

In spite of the persistence of the recession, industrial production during April grew 7% compared to a year ago, and the building industry for the first time in fourteen months managed an unexpected 12% jump. Argentine Bankers Association reported that deposits increased 700 million US dollars in one week, cutting the erosion that began last March and April, reaching 3,6 billion US dollars during the apex of the credibility crisis. But in spite of the signals and an estimated 6,5% recovery in tax revenue after two consecutive drops (March 12% and April 9%), members of the Argentine Economy Minister have indicated that five months are needed before it can be said "we're moving out of recession". Powerful Economy Minister Domingo Cavallo is currently in a conference tour of US and European cities addressing bankers and investors, and explaining the extent of the debt restructuring program, approved by the United States Securities and Exchange Committee, that should give Argentina oxygen for the next 18 months. Argentina, the third Latinamerican economy has been suffering from a three years recession with record unemployment and an inflated country risk indicator."Data will show that we're in the turning point of the economy's depressive process, which began three years ago", said Mr. Cavallo."I think we can say Argentina is beginning to leave recession and will soon be launched into a vigorous growth process", added a confident Cavallo to US bankers in New York.

Categories: Mercosur.

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