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BUENOS AIRES, Sept 30 (Reuters) - Argentine industrial output shrank in August as stricter import restrictions in the first month after the country's debt default hit manufacturers reliant on parts from abroad and recession in Brazil hurt demand for automobiles.
Output in Latin America's No. 3 economy shrank 2.9 percent in August on the year in non-seasonally adjusted terms, the Economy Ministry said on Tuesday, marking the 13th consecutive monthly decline.
The reading came in well below the median forecast in a Reuters poll of analysts for a 1.5 percent drop.
Argentina has tightened trade controls since it defaulted on its debt in July and is restricting the amount of dollars available to importers in an attempt to protect its already thin foreign reserves.
The default will prolong its banishment from global capital markets, leaving the government heavily dependent on its trade surplus for a source of dollars.
"Import restrictions have had the biggest impact on output in August and probably will do in September," said Martin Vauthier at local consultancy Bein & Asociados, noting automakers in particular were reliant on parts from Brazil.
"If Argentina doesn't get access to dollars, it will not be able to finance its current level of industrial activity."
Central bank reserves, which have dropped 8.7 percent this year and 35.4 percent since the start of 2013, fell to $27.9 billion on Monday, the lowest level since the end of April.
Production fell 1.3 percent in August from the previous month in seasonally adjusted terms, the ministry said.
Car production fell 23.7 percent in the first eight months of the year compared to the same period a year earlier, the data showed.
Argentina has rejected carmaker complaints about import controls but a government source acknowledged the problem earlier this month. The source said Buenos Aires had committed to guaranteeing them $100 million a month for car part imports.
Vauthier however said he expected import controls to be a problem as long as Argentina had not resolved its debt crisis.
Argentina defaulted in July after a U.S. court blocked a coupon payment, barring it from servicing its restructured debt until it paid in full a small group of U.S. hedge funds that rejected the terms of bond swaps in 2005 and 2010. (Reporting by Sarah Marsh; Editing by Richard Lough, Meredith Mazzilli and Andrew Hay)