Bloomberg News

Argentine Growth Slowed by Drought, Import Controls

June 08, 2012

Argentina’s economic growth probably slowed in the first quarter to the lowest since 2009 as import restrictions undermined industrial output and a drought affected the country’s soybean harvest.

Gross domestic product, the broadest measure of a country’s output of goods and services, grew 4.8 percent in the January to March period from a year earlier, according to the median estimate of eight economists surveyed by Bloomberg. That would be the slowest since a 2.6 percent expansion in the fourth quarter of 2009.

The national statistics agency will release the first- quarter GDP report on June 15 after previously scheduling it for today.

After winning re-election by a landslide in October, President Cristina Fernandez de Kirchner tightened currency controls and restricted imports, seeking to protect a narrowing trade surplus and stem capital outflows that were draining central bank reserves. The measures led Nomura Holdings Inc. and Estudio Bein & Asociados to cut their 2012 GDP forecasts.

“All the latest measures, restrictions on imports and restrictions to access the exchange market is hurting production,” said Marina Dal Poggeto, an economist at Buenos Aires-based research company Bein. “The drought affected the crops and on the foreign side, Brazil is stagnant.”

South America’s second-biggest economy is heading this year to the lowest growth since 2009, when it expanded 0.9 percent, according to the official figures. Boris Segura, an economist at Nomura in New York, this week cut his 2012 GDP forecast to 2 percent from 3 percent. Dal Poggeto also lowered her forecast, reducing it to 2.5 percent from a previous estimate of 3.5 percent in early May.

Drought Impact

“Due to the drought, agricultural output is suffering, and due to Brazil’s deceleration, industry is stagnant,” said Segura in his June 6 report. “Short-term indicators of economic activity are already reflecting this important deceleration.”

Industrial output, which has been affected by shortages of imported parts, fell 0.5 percent in April from a year earlier, the first annual drop since Sept. 2009, led by a 24 percent decline in auto production. Construction activity fell 7.6 percent the same month, the biggest year-on-year drop since July 2009.

Renault Argentina SA, the country’s third-biggest car producer, is reducing shifts at its Cordoba plant after a drop in sales prompted by slowing demand in neighboring Brazil.

The maker of the Clio and Kangoo models halted one of two production shifts yesterday and both shifts today and on June 15 in part because of falling sales, the company reported yesterday. The plant employs 1,800 people.

On June 7, the Buenos Aires Cereals Exchange maintained its estimate that farmers will harvest 39.9 million metric tons of soybeans in the current crop year compared with 50 million tons a year ago. Soybeans are the country’s biggest export.

To contact the reporter on this story: Eliana Raszewski in Buenos Aires at eraszewski@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net


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