The government in Argentina has increased its forecast for economic growth this year, expecting it to be 8.4%, up from previous estimates of 7% but there is increasing concern about rising inflation.
Morgan Stanley has more than doubled its growth forecast for Argentina, South America’s second biggest economy after Brazil. It believes growth will reach 9.7% in 2010, up from its previous estimate of 4.6% and says the expansion will be the fastest since 1992.
Argentina’s annual inflation rate rose in July to its highest level since May 2006, led by higher costs for leisure goods and clothing, according to figures from Indec, the national statistics institute. Consumer prices increased 11.2% from a year earlier and 0.8% from June. Privately though, economists and politicians are questioning the data, saying officials have been under reporting price increases since January 2007, when former President Nestor Kirchner made personnel changes at Indec.
‘The inflation problem in Argentina is absurd. It has an easy solution. We have to tighten the monetary base and slow economic growth to 4%,’ said Nicolas Salvatore, an economist at Buenos Aires University.
And according to former Finance Undersecretary Miguel Kiguel, annual inflation in Argentina is actually running at about 25%, more than double what the government says.
This came, as there are increasing calls for Indec to be made into an independent body, separate from the government. Researchers at Buenos Aires University, led by Graciela Bevacqua, who was removed from her post as director of the statistics agency’s consumer price index department under Kirchner in 2007, say that inflation is probably higher than is being reported. According to their figures consumer prices rose 1.9% in July from June.
Earlier this week, the Senate passed a bill to make the statistics agency independent from the government. The bill requires that the Senate approves the nomination of the agency’s director and would create a bicameral oversight committee. The legislation now goes to the lower house for consideration.
Kiguel and analyst Daniel Kerner of the Eurasia Group, say they don’t believe that the bill will improve the transparency in the institute’s reports in the short term.
‘This is a positive step, but a move toward full transparency will be tough and could take a long time,’ Kerner said.
Related Posts
- Brazil on track to keep finances under control with robust growth predicted
- Argentina woos the Chinese in a bid to increase economic cooperation and trade between the two countries
- Historic gay marriage law makes Argentina one of the world’s most liberal countries
- Slowing economic growth is helping Brazil to tackle high inflation rates, it is claimed
- Obstacles prevent new glacier bill becoming law in Argentina
