Furthermore, consumption remains subdued.  In May, supermarket sales dropped 1.4% over the same month in 1999.  Annual supermarket sales have illustrated a clear recessionary trend since April 1999.  In fact, the variation in moving annual average of supermarket sales has shown declines for 14 consecutive months.  Despite a brief seasonally spike over the winter holidays, consumer confidence about the economic prospects for this year remains low and is likely to put further downward pressure on consumption.  The University Torcuato di Tella's July consumer confidence index (ICC) showed a strong downward shift in consumer confidence.  In July, both confidence in the economy and consumer confidence for this year dropped by 17.8% and 3.7% respectively over the previous month.

Export growth remains healthy.  In June the trade balance registered the fourth consecutive monthly surplus since the beginning of the year.  While exports were up 13.6% over the same month in 1999, imports contracted 1.8%.  As a result of the favourable export performance, the accumulated trade balance registered for this year reached a surplus of US$ 896 million.  A key driver behind the boost in exports was a doubling of fuel exports, which were spurred by increased production and more favourable oil prices.  Total manufacturing exports rose by more than 10%, while primary sector exports, particularly wheat and soybeans, expanded by 6.0%.  Lagging domestic demand is likely to keep import growth from expanding rapidly through the end of the year.

Note:  The above text is an abridged version of the LatinFocus Consensus Forecast briefing on Argentina.  For more details please click here.

For five-year forecasts, please click here.