Argentina’s central bank sees 2011 GDP growth exceeding 6.5%

May 1, 2011 - 0:0

BUENOS AIRES (Dow Jones)--The Central Bank of Argentina said Friday it expects the economy to expand more than 6.5% this year on the back of strong domestic demand.

“For 2011 an expansion in (economic) activity superior to 6.5% is expected and an unemployment rate close to the lowest levels of the last 20 years,” the central bank said in its second-quarter inflation report.
In March, Central Bank President Mercedes Marco del Pont said that 6% was “the floor” for expected gross domestic product growth this year.
Economic growth pushed the unemployment rate down to 7.3% at the end of 2010, and the government expects it to fall to around 6.6% by the end of this year.
Argentina’s economy is experiencing a boom thanks to elevated levels of consumer and government spending as well as strong demand for its exports.
Argentina is the world leader in soymeal and soyoil exports, and ranks No. 2 in corn exports and third in soybeans. It is also a major exporter of automobiles and auto parts in Latin America, most of which are shipped to neighboring Brazil.
During the first quarter, Argentina posted a trade surplus of $1.79 billion, down from $1.98 billion in the same period last year.
In its report, the central bank cut its outlook for the full-year trade surplus to about $9 billion, from $10 billion, owing to demand for imported capital goods and fuels.
Argentina posted a trade surplus of $12.06 billion last year, down from $16.89 billion in 2009 and $12.56 billion in 2008.
The administration of President Cristina Fernandez has stepped up its efforts in recent months to stem imports by expanding the list of goods that require a nonautomatic import license, as well as slapping antidumping duties on a number of Chinese products.
At the same time, the government has prodded foreign companies doing business in Argentina to source more of their inputs locally or increase exports to offset their imports.
The central bank said consumer prices should remain stable in the coming months in the absence of negative “shocks” to food supplies.
The government’s heavily criticized national statistics agency, Indec, put annual inflation at just 9.7% at the end of March. However, most private sector economists say inflation is running at over 20% as an overheated economy puts upward pressure on consumer prices.