BUENOS AIRES -(Dow Jones)- Argentina's economic activity cooled sharply in December, the national statistics agency, Indec, said Friday.
Indec's monthly economic activity indicator, or Emae, rose 5.5% from December 2010. The increase in the index, which measures most components of gross domestic product, was substantially lower than the 7% median estimate of six economists polled by Dow Jones Newswires.
Compared with November, economic activity contracted 0.2% in seasonally adjusted terms, Indec said.
The Central Bank of Argentina expects GDP to grow 6% in 2012, after expanding about 9% in each of the last two years.
Many of the tailwinds that allowed the economy to nearly double in size in the last 10 years will be absent or much diminished in 2012.
Brazil is expected to buy fewer manufactured goods from Argentine factories, and dry weather in December and most of January will likely dent agriculture exports from the South American farming nation.
At the same time, President Cristina Kirchner has started to cut government spending following years of largesse. The administration already has ended generous energy and utility subsidies for wealthy individuals and a host of industries.
Indec is widely believed to overstate economic growth because it underreports inflation by a significant margin.
The agency's credibility has come under fire since former President Nestor Kirchner replaced long-serving staffers with political appointees in early 2007. Official and private-sector forecasts of inflation quickly diverged following the personnel changes.
Goldman Sachs expects Indec to report 4% growth this year.
"We highlight that according to a number of private sector estimates, the official figures have in recent years been overstating real GDP growth by up to 2-3 percentage points," Goldman Sachs economist Alberto Ramos said in a note.
nasdaq.com
Indec's monthly economic activity indicator, or Emae, rose 5.5% from December 2010. The increase in the index, which measures most components of gross domestic product, was substantially lower than the 7% median estimate of six economists polled by Dow Jones Newswires.
Compared with November, economic activity contracted 0.2% in seasonally adjusted terms, Indec said.
The Central Bank of Argentina expects GDP to grow 6% in 2012, after expanding about 9% in each of the last two years.
Many of the tailwinds that allowed the economy to nearly double in size in the last 10 years will be absent or much diminished in 2012.
Brazil is expected to buy fewer manufactured goods from Argentine factories, and dry weather in December and most of January will likely dent agriculture exports from the South American farming nation.
At the same time, President Cristina Kirchner has started to cut government spending following years of largesse. The administration already has ended generous energy and utility subsidies for wealthy individuals and a host of industries.
Indec is widely believed to overstate economic growth because it underreports inflation by a significant margin.
The agency's credibility has come under fire since former President Nestor Kirchner replaced long-serving staffers with political appointees in early 2007. Official and private-sector forecasts of inflation quickly diverged following the personnel changes.
Goldman Sachs expects Indec to report 4% growth this year.
"We highlight that according to a number of private sector estimates, the official figures have in recent years been overstating real GDP growth by up to 2-3 percentage points," Goldman Sachs economist Alberto Ramos said in a note.
nasdaq.com
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