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Argentine economy booming but in full production capacity

Tuesday, April 17th 2007 - 21:00 UTC
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Argentina's economic activity in February expanded 7.9% over the same month a year ago, and 0.6% over January 2007, according to the latest release from the National Statistics and Census Office, Indec.

However this year's February 7.9% was below market expectations (8.1%) and the lowest since February 2003 confirming that growth in Argentina is beginning to flatten. February 2006 growth was 9.1% over February 2005. "The sector that is growing strongly is financial, followed by the construction industry and grains exports given the spectacular increase in corn, soybean and wheat crops, and finally we have manufacturing", said economist Orlando Ferreres from a Buenos Aires economic advisory office. Ferreres forecasted the Argentine economy will expand in the range of 8% in the first quarter of this year, and begin to gradually decelerate towards 6/6.5%. "There's insufficient available capacity; we need more investments to keep growing at current levels", he argued. According to local economists "more and more Argentine sectors are reaching their production capacity limit and this makes them increasingly dependent on investments from the last two to three years, which was insufficient". "We're facing a significant slowing down of the economy. One of the leading factors is investment in construction, both private and through public works, which is gradually eroding compared to previous growth rates". Economists also point out to the fact that even when grain exports "nominally have a positive evolution in real terms they are also decelerating. According to the latest Economic Outlook from the IMF, Argentina this year is forecasted to have the fastest growing economy.

Categories: Economy, Argentina.

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