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Argentina - Economy

Whitaker's Almanack Version

Financial Outlook

The UN estimated in December 2013 that the Argentine economy expanded by around 4.1% in 2013, but it expected a sharp deceleration in growth to just 2.6% in 2014. Growth in 2013 was largely driven by a bumper harvest, but the expansion slowed in the second half of the year as the country encountered increasing headwinds. Foremost among these was the slowdown in neighboring Brazil, the country’s main trading partner. Inflation is also a serious concern. Private economists estimate Argentina’s annual inflation at over 25% in 2013, more than double the rate published in discredited official statistics. The central bank’s persistent recourse to printing money has helped to fuel the second-highest rate of inflation in the Americas after Venezuela. High inflation has also triggered foreign exchange outflows from the country. Thus, the country’s foreign reserves had plunged by 29% by the end of November 2013, amounting to the biggest annual decline since 2002, when they sank 47% in the aftermath of the country’s debt default. By the end of November 2013, foreign exchange reserves had fallen to a six-year low of $US30.5 billion. In December the IMF called on Argentina to revise its inflation and economic growth statistics by the end of March 2014, giving the country more time to improve its highly questioned economic data. Earlier, in February 2013, the organization had censured Argentina for failing to improve its economic statistics, the first time the IMF took such action.

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