Strong symptoms of a slowdown of the Argentine economy, possibly leading to recession, have been confirmed by Torcuato Di Tella University's, UTDT, closely watched leading indicators.
Those indicators have fallen for a sixth consecutive month in April, while the odds that the economy enters recession soared to 98%. When those odds surpass 95%, the Argentine economy has historically suffered a recession within six months, UTDT said in a report.
UTDT diffusion index was steady at 40% in April, indicating only four of the 10 series that constitute the index were in expansion while the other six contracted. The biggest declines were noted in the stock market and construction activity.
Recent economic data are hardly encouraging. The auto industry, Argentina's largest manufacturing sector, reported that production in May fell 24.4% on the year to 60,206 vehicles and exports plunged 45% reaching 28.650 units.
The auto industry is one of the pillars of the Argentine economy mainly because of the strong demand from overseas, particularly Brazil. So far this year sales to Brazil have dropped 30.6% compared to the same period in 2011.
The Car Manufacturers Association of Argentina, Adefa, said that in the first five months of 2012, auto production reached 278.815 units, which represents a 10.5% drop, while exports have plunged 26,5% in the same period to 143.587 units according to.
Adefa president Viktor Klima said that data is showing a re-accommodation of markets globally and anticipated that “diversification of markets becomes essential”.