UPDATE 2-Argentina says to eke out growth in 2014; economists skeptical

lunes 15 de septiembre de 2014 17:31 GYT
 

(Adds comments from economy minister and analyst)

By Maximiliano Rizzi

BUENOS AIRES, Sept 15 (Reuters) - Argentina's economy will eke out growth of 0.5 percent this year and inflation will hit 21.3 percent, the government forecast in its 2015 budget bill on Monday, but private economists branded even these bleak estimates as "optimistic".

Latin America's third-largest economy slid into recession at the start of the year on declines in industrial output and private consumption after a decade of mostly stellar growth. Meanwhile, a sovereign bond default in July has heightened uncertainty.

Independent economists were unimpressed by the forecasts released by President Cristina Fernandez's government in the budget bill, saying they are highly politicized. The economists say the economy will contract by between 2 and 3 percent this year and inflation will rise above 30 percent.

"The government estimates look unlikely. We had a contraction of 1 percent in the first half, and the second half is looking worse," said Fausto Spotorno, an economist at local consultancy Orlando Ferreres and Associates.

If the economy shrinks this year, it would be the first full-year contraction since 2002.

"Soy prices are lower, there is less employment and inflation is going up and eating into real wages, which means pressure on tax revenue," Spotorno said. "And then there's the default, which makes borrowing more expensive."

Inflation has already clocked in at 18.2 percent since the start of the year, according to official data, while employment hit its lowest level in eight years in the second quarter.   Continuación...