Argentina's growth falls to two-year low

Buenos Aires: Argentina's economy grew 5.5 per cent in December, the slowest year-on-year rate in nearly two years, and was also down slightly from the previous month, the Indec statistics agency said on Friday.

December's reading highlights a marked cooling off in recent months in Latin America's third-largest economy, which some private analysts think is growing more slowly than official data indicates.

Still, December's year-on-year reading marked the slowest pace of growth since January 2010 when it grew by 5.1 per cent, and came in far below market expectations.

A Reuters poll of economic analysts forecast growth of 7.0 per cent in December year-on-year, slightly slower than the previous month's 7.6 per cent expansion.

The EMAE economic activity index, a close proxy for gross domestic product, slipped 0.2 per cent in Dec-ember from November.

The negative month-on-month reading compared with a 0.8 per cent increase in November from October.

December's data brought full-year growth to 8.8 per cent, slightly below 2010's blistering 9.2 per cent expansion.

Industrial production

December's result was dragged down by industrial production, which rose just 2.1 per cent year-on-year, its slowest pace in 26 months. Factory output grew 6.5 per cent overall last year, according to Indec.

Argentina's economy has been growing at one of the region's fastest rates in recent years, but private economists say official data exaggerates growth by about 2 to 3 percentage points.

Consulting firm Orlando J. Ferreres & Asociados, using its own methodology, said economic activity rose 3.0 per cent in December year-on-year and 5.8 per cent in 2011 as a whole.

The firm said in a recent report that it expected an industrial slowdown, moderate agricultural output and an easing of consumer spending to further cool the economy in 2012.

Argentina's inflation data has been discredited for the last five years as too low to reflect true price growth, while official economic growth and industry output figures have been seen as overly optimistic.

Some independent analysts forecast "real" growth of as little as 2 per cent this year.