MercoPress. South Atlantic News Agency

Argentine economy suffering “fatigue”, admits government

Argentine cost are too high complain industry and farmers

The Argentine economy seems to be suffering of “fatigue” according to the latest official reports and which had been anticipated by President Cristina Fernandez de Kirchner earlier in the week.

According to the controversial Statistics and Census Office, Indec, June economic activity in Argentina expanded 6.5% compared to June 2007 but was down 0.8% from May. The report indicates that 6.5% is the lowest rate since April 2006 and represents 1.5 percentage points down from May and 2.5 percentage points down from April. With the June data, Argentina's growth in the first half of the year reached 8.1% which is 1.6 percentage points below the previous six months. However these numbers are from the Economic Activity Monthly Estimate which Indec provides monthly but not necessarily reflect GDP percentages since these are only released on a quarterly basis. Mrs. Kirchner had anticipated the "fatigue" which she attributed to the long standing conflict with farmers and only ended in mid July, although misunderstandings persist. She also called to leave "discrepancies" aside and work to "recover lost time". However her words and the announcement of the Argentine government's intention of recouping 2008 and 2009 bonds did not impede risk rating agencies from downgrading the quality of Argentine debt to almost pre-default. The distrust feeling was somehow confirmed by former president Eduardo Duhalde who warned that "yellow lights" are shinning and "even economists who support the government" admit that the Argentine economy, both agriculture and industry, face serious challenges, mainly "competitiveness problems". Duhalde made his comments during a political rally with farmers in Entre Rios, one of the main resistance points during the recent stand off with the Argentine government over farm export taxes. "Ruling Argentina is very simple, don't make it hard…you must do what common sense indicates. And common sense is pointing to productive development…let's copy Brazil and stop fooling around", added the former caretaker president who sponsored Nestor Kirchner for president in 2003. Duhalde also underlined and praised the role played by the farming sector back in 2002 when the melting of the Argentine economy and massive default, "it was the leaders of the farmers organizations which most helped the country". A video of the time was screened where one of the farm leaders Eduardo Buzzi, who also played a pivotal role in the recent conflict, is seen arguing against farm export taxes, but given Argentina's situation accepted the tax, as a contribution for the recovery of the country.