15 de septiembre de 2014 / 20:09 / en 3 años

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

(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.

Heavy government spending and high commodity prices have helped drive annual growth in the grains powerhouse by an average 6.2 percent since Argentina’s catastrophic 2002 debt default and economic crisis.

But growing state intervention, including controls on prices and the currency market, has exacerbated economic imbalances and damaged business confidence and investment.

Falling commodity prices and recession in main trading partner Brazil are further weighing on the economy this year.

Nonetheless, the budget bill sees growth picking up to 2.8 percent in 2015 and inflation easing to 14.5 percent.

“We expect to continue a policy of promoting our domestic market,” Economy Minister Axel Kicillof said in presenting the budget to legislators. “We expect a year in which there is a recovery in international trade, but not necessarily an exceptional year for the world economy.”

Alejo Costa, chief strategist at local investment bank Puente, said the budget was “rather optimistic” and tallied with the government’s belief that “creating positive expectations is important to stimulate the economy”.

The government sees the exchange rate, which is fixed in Argentina, at 9.45 pesos per U.S. dollar in 2015. It currently stands at 8.4025, while the black market rate has weakened in recent weeks, hitting a record low of 14.47 per U.S. dollar earlier on Monday.

Tight capital controls mean Argentines are often forced to resort to the black market when they cannot get hold of greenbacks through official channels.

The government cut its estimate for Argentina’s energy deficit to between $8 million and $9 billion this year from a previous estimate of around $10 billion.

The country’s chronic energy deficit, meaning imports exceed imports, puts a strain on its rapidly dwindling foreign reserves. Many economists see Argentina facing a balance of payments crisis next year. (Additional reporting by Alejandro Lifschitz and Hugh Bronstein, writing by Sarah Marsh; editing by James Dalgleish, Leslie Adler and Peter Galloway)

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