MercoPress. South Atlantic News Agency

Argentine central bank confirms (unorthodox) growth policies for 2012

A rosy forecast from the Central bank under president Mercedes Marcó del Pont

Argentina's economy should expand by 4.5% to 7.5% in 2012 according to the Central bank that also warned about the threat of the consequences of the Euro crisis. The bank’s latest approved monetary program states that the policies that have helped Argentina's economy boom over the last nine years will remain largely in place.

“The biggest source of uncertainty is associated with the sovereign debt crisis and financial system risk presented by the advanced economies,” the program says.

Investors meanwhile fret that President Cristina Fernandez's unorthodox and hard-to-predict policies will leave Argentina vulnerable to fallout from Europe's debt woes, to slower demand from key commodities client China next year and from Brazil’s deceleration, which is the country’s main trade partner.

Argentina has roared back from the dark days of its 2001-02 sovereign debt default and shock currency devaluation. Cristina Fernandez credits her policies, and those of her late husband, Nestor Kirchner, who preceded her in office, for the rapid expansion at ‘Chinese’ rates.

But Wall Street takes a dim view of her reliance on state intervention in the economy, and Argentina has remained locked out of the international capital markets.

The country's economy grew 8.1% in October from a year earlier, beating market expectations but marking the slowest pace of growth in a year. Inflation for full-year 2012 is seen at 9.2%, according to the document issued by the central bank.

Private economists say that Argentina has under-reported consumer price increases over the last five years for political gain as well as to save on inflation-linked bond payments. They say the country's inflation rate is actually more than twice (25%) the rate reported by the government.

The central bank targeted broad M2 money supply growth at an average of 26.4% for 2012, compared with the target for growth of 27.9% for 2011.

Argentina's trade surplus more than doubled in November from a year ago and the Central bank projects a positive balance of 8.9 billion dollars in full-year 2012.