(Adds details on current account deficit)
BUENOS AIRES, March 20 (Reuters) - Argentina said on Friday that economic growth slowed to 0.5 percent in 2014, but private analysts said the real picture was even gloomier and Latin America's third-largest economy most likely contracted as consumer spending and exports fell.
The country is struggling with low foreign reserves and one of the world's highest inflation rates. Interventionist policies such as trade and currency controls have further put a brake on business as has recession in top trading partner, Brazil.
While those state controls on the economy helped maintain a trade surplus last year, Argentina's overall current account deficit widened 7.9 percent due to the volume of debt payment, profit and dividend outflows, data showed.
President Cristina Fernandez's government is widely suspected of manipulating official data.
"Growing macro imbalances and a weak investment environment are keeping the economy trapped in a bad equilibrium of very weak growth, high inflation, and an increasingly over-valued currency," said Alberto Ramos, head of Latin America economic research at Goldman Sachs.
Argentina's economy grew strongly in the early years of Fernandez's presidency thanks to heavy government spending and high commodity prices. But growth has faltered over the past few years, as inflation sped up, battering consumer spending, and the state ramped up interventionist policies.
Growth was 2.9 percent in 2013 according to official data.
With presidential elections set for October, economists anticipate the next government will inherit a weak economy beset with imbalances. Fernandez is constitutionally barred from another consecutive term.
Government data released on Friday showed the current account deficit widened to $5.07 billion in 2014. The current account is the broadest measure of a country's foreign transactions, encompassing trade, services and an array of financial flows, including interest payments.
Imports fell 11.5 percent but exports slid even more, by 11.9 percent. The Economy Ministry said Argentina nonetheless posted a $6.42 billion surplus on trade and services, but that the total outflow of income was $11.40 billion.
Gross domestic product grew 0.4 percent on the year in the fourth quarter of 2014 while it was stagnant on the quarter.
BNP Paribas said in a note that it expected GDP to have been flat in the fourth quarter as an "overly expansionary fiscal policy increased the budget deficit", fuelling inflation.
"The fall in real income dented purchasing power and reined in consumption," the bank said, adding it expected GDP to drop 2.2 percent in 2015. (Reporting by Sarah Marsh and Richard Lough; Editing by Diane Craft, Andre Grenon and Lisa Shumaker)