March 23, 2012 / 11:21 PM / 8 years ago

WRAPUP 2-Argentina Feb industry output shows little rebound

* Factory production rises less than expected in February

* Automotive sector rebounds but overall figure disappoints

* Current account deficit narrows to $356 mln in fourth quarter (Recasts; Adds context, quote)

By Hilary Burke

BUENOS AIRES, March 23 (Reuters) - Argentina’s industrial production growth in February fell short of market expectations, underlining an economic slowdown in Latin America’s No.3 economy, official data showed on Friday.

Factory output rose 2.7 percent year-on-year but declined 1.4 percent from January, falling for a second straight month.

Argentina’s economy has boomed in the last nine years at China-like rates, but activity is now cooling, led by sharply slower growth in the industrial sector.

Analysts in a Reuters poll had forecast February’s factory output growth at a median 3.2 percent year-on-year, with estimates between 2.3 percent and 5.0 percent.

The crucial automotive sector rebounded in February, jumping 21 percent from a year earlier and 41 percent versus January. But this was not enough to fuel a significant jump in the overall figure.

Industrial production rose 2.1 percent year-on-year in January and 2.2 percent in December. In 2011 as a whole, it was up 6.5 percent, according to the INDEC national statistics agency.

“Manufacturing activity is showing an evident moderation since last September, which we do not see changing in the short or medium term,” Bank of America Merrill Lynch said in a report this week.

“Despite the marginal recovery in the automobile industry in February, we do not expect any major change in the overall trend,” the bank added.

Private analysts say the government reports overly rosy numbers for industrial production and economic growth, while drastically under-reporting inflation, which at roughly 25 percent per year is one of the world’s highest rates.

Analysts say import hurdles imposed by the center-left government, aimed mainly at protecting the trade surplus, may end up hurting domestic production that relies on foreign-made parts or raw materials.

FIEL economic think-tank, whose industrial production data is cited widely abroad, said the restrictions may already be taking a toll.

February’s industrial production rose 2.2 percent year-on-year, according to FIEL, but slipped 0.7 percent versus January.

Industrial output tends to slow during the Southern Hemisphere’s summer months of January and February as plants halt production for maintenance.

Argentina’s automobile production and exports sank in December and January, mainly because of shrinking demand from top client Brazil.


Argentina’s fourth-quarter current account deficit narrowed from a year earlier to $356 million. The merchandise trade surplus improved year-on-year, probably thanks to the import hurdles, but the overall figure was dragged down by hefty outflows related to company profits and dividends.

The government revised the fourth-quarter 2010 current account deficit number slightly to $546 million.

In 2011, the current account balance of payments scraped a tiny surplus of $17 million compared with a revised $2.82 billion surplus in 2010.

The annual figure reflects a decline in the merchandise trade surplus, which fell to $13.54 billion from $14.27 billion in 2010 as import growth surged on robust consumer demand and high inflation that makes imports relatively cheaper.

Additional reporting by Juliana Castilla and Helen Popper; Editing by Diane Craft

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