Argentina data point to creeping recession

June 7, 2012 at 6:05 PM
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BUENOS AIRES, June 7 (UPI) -- Argentina's continuing troubles with commodity exports, falling exports of other raw materials, automobiles and other industrial goods are pushing the country toward recession, new economic data indicated.

Research by Torcuato Di Tella University in Buenos Aires cited "strong symptoms" of an economic slowdown that, combined with other data, showed falling demand building recessionary pressures.

Argentina is also facing renewed investor pressures in the wake of the government's summary nationalization of Spanish oil giant Repsol's local unit YPF.

Argentine President Cristina Fernandez de Kirchner rushed legislation through Parliament to formalize the takeover but the measure has sent discouraging signals to the business and investor community.

The university's data showed that Argentina's economic indicators fell for a sixth consecutive month in April, while the odds that the economy was moving toward recession soared to 98 percent, Argentine news media analysts said, citing the research.

The university's research argues that when those odds go beyond 95 percent, the Argentine economy historically has suffered a recession within six months.

There was no immediate government reaction to the report. Senior government officials including Fernandez have shown acute sensitivity to any hint of negative financial research and have taken punitive measures against researchers, including financial analysts.

Argentine car industry, construction and the stock market in general have recorded major declines in recent months, the data indicated.

The auto industry, Argentina's largest manufacturing sector, has been one of the worst hit areas. Vehicle production in May showed a year-on-year drop of 24.4 percent to 60,206 vehicles while exports plunged 45 percent to reach less than 29,000 units.

Argentine vehicle exports to Brazil have suffered a drop of more than 30 percent, amid mounting disputes between the two countries over restrictive trade practices.

Meanwhile, trouble continues to brew on Argentine farms. Argentine farmers' organizations announced a fresh strike that threatens further to cripple the country's trade in grains, livestock and oilseeds.

The farmers' groups said they intended to halt all trade in agricultural goods to protest government policies and tax increases. The farmers' representatives also accused the government of insensitivity and refusal to address their grievances.

The increase in transportation costs has also sparked protests throughout the farming community.

Buenos Aires farmers' representatives received conditional assurances from the provincial administration that their demands would be heard. Provincial Gov. Daniel Scioli told farmers' representatives he was prepared to review legislation affecting the farming communities but set a precondition. He said he wants the farmers to end their protests first.

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