WRAPUP 3-Argentine economy shrinks in Q3, Nov. industry up

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By Kevin Gray

BUENOS AIRES Dec 18 (Reuters) - Argentina's economy shrank for a second straight quarter from July to September, but industrial output jumped in November as auto production surged, indicating a turn in the economy, data showed on Friday.

Local media and some economists said the country had fallen into a recession, even though the economy was flat in the third quarter compared with the second quarter, ruling out a recession under some definitions.

Argentine official data is widely questioned and most private experts forecast a contraction in 2009, though the government says the economy will grow slightly.

Third-quarter gross domestic product fell 0.3 percent compared with the same period a year ago and was unchanged from the previous quarter, the INDEC national statistics agency said.

Industrial production, however, rose 4 percent in November from the same month last year, eclipsing the median forecast for a 1.2 percent expansion in a Reuters poll.

"The real business cycle reached an inflection point sometime during the third quarter," Alberto Ramos, a senior economist at Goldman Sachs, wrote in a research note. "The economy is now experiencing a mild rebound on the back of firming commodity prices, recovering global trade and real activity."

Automobile production jumped 32.4 percent and tire production leaped 12.9 percent in November, with the sector boosted by an economic recovery in Brazil, Argentina's biggest trade partner and a major buyer of Argentine vehicles.

In the second quarter, the Argentine economy shrank for the first time in eight years as the global slowdown sapped demand for the country's commodity exports and curtailed domestic spending.

In the third quarter, the goods-producing sector fell 3.6 percent, while the services sector rose 1.6 year-on-year.

"The worst seems to be over," said Patricio Cancelmo, an analyst at the Buenos Aires-based consultancy, Portfolio Personal.

Argentina's statistics agency has been widely questioned for more than two years as private economists accuse the government of overstating growth and underreporting inflation for political gain.

Some figures in recent months have been believed closer to private analysts' estimates.

Economic growth in the first nine months of the year totaled 0.2 percent, but many analysts say the economy shrank during that period and will finish the year with negative growth.

"The economy is still likely to contract on average between 3 percent and 2 percent although the official statistics are likely to show a small positive figure," Ramos said.

The government forecasts an expansion of 0.5 percent in 2009 and 2.5 percent in 2010.

In the first 11 months of the year industrial production is down 0.6 percent from the same period of 2008. (Additional reporting by Juliana Castilla; Writing by Kevin Gray; Editing by Leslie Adler and Diane Craft)