Argentina has fastest growth in Latin Am

The Economist Intelligence Unit forecasts that economic expansion is likely to moderate to 5.5% in 2005, as the gains of 2004 will not be repeated this year.

- On the demand side, private spending grew by 9.4%, the highest rate recorded in more than a decade, while investment spending surged by 34.5%, powered by strong construction activity as well as increased investment in plant and machinery. In volume terms, the export component increased by 8.2%, but this was eclipsed by a 39.8% jump in imports.As a consequence, net foreign trade exerted a mild drag on GDP growth in 2004.

- The EIU 5.5% GDP growth forecast for 2005 assumes that the pace of job creation will slow and monetary policy tighten. Authorities' commitment to maintaining a competitive exchange rate will benefit goods producers who service both the domestic and the export markets.

- Exports will continue to grow, but net exports will make a moderately negative contribution to growth as imports recover from depressed levels dating back to 2001-02. Investment will continue to grow strongly, much of it concentrated in construction.

- Foreign-owned firms are expected to proceed cautiously with their investment plans because of uncertainty over government policies. Investment in the agricultural sector will be curbed by falling profitability resulting from lower commodity prices.

- SOURCE: EIU / INFO-e