MercoPress. South Atlantic News Agency

Argentina's industrial output falls; first time since 2002

Argentina's January industrial production fell 4.4% from a year ago, the first decline since October 2002, and 6.1% from a month earlier, in seasonally adjusted terms said the government this week.

This was the latest figure to highlight a sharp slowdown in Latinamerica's third largest economy which has been growing at an average 8% annually since 2003. Multilateral organizations and the private sector are anticipating very low growth in 2009. The INDEC statistics institute said the steep fall partly reflected a record pace for January growth in 2008. However the automotive sector took the biggest hit in January having fallen 49.3% from a year earlier. INDEC said most car manufacturers had produced at a record pace in January 2008 and shut down for maintenance the following month. The production of raw steel and aluminium dropped 21.7% in January from a year earlier, while textiles output fell 10.3%. Factories' capacity utilization slipped to 67.4% last month, reaching its lowest level since February 2004, with utilization in the auto sector plummeting to 22.4%. The government of President Cristina Fernandez de Kirchner as part of stimulus measures has tried to revive the local auto industry by subsidizing the cost for potential buyers. "(January's) decline is mostly attributable to the global crisis, but there was a significant slowdown even before the world crisis exploded in October," said Fausto Spotorno, an analyst at Orlando Ferreres & Asociados, which has measured four straight months of declines in industrial output. Although the government's January data came in below expectations, they still fell short of private estimates. Consulting group Orlando Ferreres said its industrial production index showed a 9.1% drop in output in January, while research by the FIEL consultancy indicated an 11.4% decline. The official INDEC figures have been long questioned, particularly those referred to consumer prince index and inflation since the government several years ago removed experts and replaces them with political cronies. The INDEC inflation index is not considered serious and even the private sector work with their own estimates and the powerful trade unions movement, aligned behind the government, has announced it will demand salary adjustments based on the "house wives shopping index".