Argentina’s Economy Grows at Slowest Full-Year Pace Since 2009Charlie Devereux
Argentina’s economy expanded 0.4 percent in the fourth quarter from the year earlier, bringing full-year growth to its slowest pace in five years as dwindling foreign reserves led the government to restrict dollars for imports.
Fourth-quarter growth compared with the 0.3 percent median estimate of seven economists surveyed by Bloomberg. In the full year, gross domestic product expanded 0.5 percent, the national statistics agency said Friday.
The government has restricted licenses for imports, making it harder for manufacturers to obtain raw materials and crimping production, according to industry groups. Imports fell 15 percent to $17.6 billion in the fourth quarter from a year earlier. Sluggish growth will probably continue into this year, with imports dropping 19 percent in January from a year ago.
“Argentina has lots of problems in economic management that generated these difficulties,” said Maximiliano Castillo, director of Buenos Aires-based research firm ACM SA. “What we’re seeing is the result of policies that have led to stagnant growth with elevated inflation.”
Private economists say the economy is faring even worse than official figures show. GDP contracted 1.5 percent in the fourth quarter from the year earlier, according to the median estimate of 23 analysts in a Bloomberg survey.
In February 2013, Argentina became the first nation to be censured by the International Monetary Fund for allegedly misreporting economic data. The government last year introduced a new consumer price index and changed the base year for calculation of its GDP index in response to IMF demands.
ACM’s Castillo, who predicted the government would report growth of 0.5 percent in the fourth quarter, estimates the economy shrank 2.2 percent last year.
The auto industry has been particularly hard hit, with new taxes, falling imports and declining demand from Brazil, the country’s biggest trade partner. Production fell 22 percent in 2014 to 617,329 units, according to the Association of Automobile Manufacturers.
The shortage of dollars intensified in July of last year when the government defaulted on its debt following a protracted legal battle with creditors who declined to join restructurings on a record $95 billion credit event in 2001. The default restricted the government’s access to capital markets.
Argentina posted a current account deficit of $1.7 billion in the fourth quarter and a deficit of $5.1 billion for 2014, the statistics agency said Friday.