Argentina’s economy grew more than expected in the first three months of the year as spending, consumption and financial services rebounded even as the nation’s trade surplus narrowed on increased imports.
The economy, the second-largest in South America, grew 3 percent in the first quarter from a year earlier, more than the 1.9 percent median estimate of three economists surveyed by Bloomberg. Argentina grew 1.9 percent in 2012.
President Cristina Fernandez de Kirchner is increasing public spending and handouts to poor families this year to stoke consumption ahead of congressional elections. While growth beat estimates, Fernandez is struggling to contain annual inflation estimated at 24 percent and a narrowing trade surplus on the back of higher energy imports.
Consumer spending expanded 6.1 percent in the quarter and investment rebounded 1.3 percent after three consecutive negative quarters. Financial services expanded 22 percent and retail sales grew 6.5 percent, according to the report published today by the National Statistics Institute.
Consumer prices rose 23.7 percent in May from a year earlier, according to opposition lawmakers who release private estimates. The national statistics agency reported 10.3 percent inflation for May.
The nation’s trade surplus shrank in the first quarter, after exports fell 8.5 percent and imports increased 6.2 percent. Argentina’s trade surplus in March narrowed to $510 million from $1 billion a year earlier.
Argentina, which is the world’s largest exporter of soybean oil and the third-largest of raw soybeans, said agriculture was flat in the quarter, after declining 10.3 percent a year earlier.
Barclays Plc cut its growth forecast for Argentina to 2.4 percent this year from 2.9 percent, citing an eroding balance of payments. That’s below the 3 percent forecast of 23 economists surveyed by Bloomberg.
“We think the economy is experiencing a balance-of-payments crisis, in slow motion,” Barclays analysts including Sebastian Vargas wrote in a report yesterday. “We feel the authorities’ experimenting is in opposition to basic economic laws, as expanding domestic credit and spending do not help reduce external imbalances.”
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