BUENOS AIRES, March 15 (Reuters) - Argentina's gross domestic product expanded 2.1 percent in the fourth quarter from a year earlier, the government said on Friday, bringing full-year 2012 growth in Latin America's No. 3 economy to 1.9 percent, as expected.
The expansion in the last three months of last year was driven by 4.2 percent year-on-year growth in the services sector, which outweighed a 1.9 percent contraction in manufacturing, it said.
The fourth quarter expansion came in at 1.3 percent versus the third quarter. But private economists and the International Monetary Fund (IMF) have long suspected the government of manipulating its official statistics.
The full year GDP growth figure, a substantial slowdown from the 8.9 percent expansion clocked by Argentina in 2011, was expected by analysts and creditors holding growth-linked GDP warrants issued during the country's 2005 and 2010 debt restructurings.
The warrants pay out only when growth tops a certain threshold. If 2012 growth had exceeded 3.26 percent, Argentina would have been obliged to pay roughly $4 billion on the warrants in December of this year. .
Private consumption in the country rose 4.5 percent year on year in the fourth quarter of 2012 versus a 2.1 rise in the third quarter, the government's INDEC statistics institute said.
Moody's Investors Service on Friday cut the credit rating on Argentine sovereign debt governed by foreign law to Caa1, citing increased risk of a default due to a U.S. legal case involving investors who declined to participate in the country's 2005 and 2010 restructuring of defaulted obligations.
Argentina's international bonds underperformed the rest of the market on Friday, widening by 8 basis points while the JPMorgan Emerging Markets Bond Index Plus widened only 2 basis points. Wider spreads reflect higher perceived risk.
The country is widely accused of manipulating inflation data and, to a lesser extent, growth data. It faces potential sanctions by the IMF, which last month issued a "declaration of censure" against Argentina over the quality of its inflation and GDP data.