By Magdalena Morales
BUENOS AIRES, Aug 19 (Reuters) - Argentina's economy is seen growing about 8.5 percent this year and 5.5 percent in 2011, the country's deputy economy minister said on Thursday, confirming red-hot growth in Latin America's No. 3 economy.
The government had previously estimated 2010 growth at around 7 percent after the economy slowed sharply during last year's global crisis.
'We're almost certain annual growth will be above 8 (percent), surpassing 8.5 (percent), by the end of the year,' Deputy Economy Minister Roberto Feletti told Reuters. 'The Argentine economy is experiencing a strong recovery.'
The 2011 growth estimate was the government's first as ministry officials draft next year's budget bill, which must be sent to Congress in September.
Argentina's recovery is being driven by robust demand from neighboring powerhouse Brazil, record soy and corn harvests and strong consumer spending.
And investors have been flocking to the country's gross domestic product (GDP) warrants, whose payments rise along with economic growth.
Alberto Bernal, at U.S-based Bulltick Capital Markets investment bank, said Argentine assets in general have been attracting investors in search of high yields.
'Everything to do with Argentina has been seeing incredible demand,' Bernal said. 'If you want to get yield, you have to get creative, and Argentina is one of the few stories around the world that will give you yield.'
Argentina is still seen as a risky bet. That is reflected in its high debt spreads over comparable U.S. Treasuries which only trail behind those of Venezuela and Ecuador, according to JPMorgan's EMBI+ index.
The country is mopping up the final remnants of a massive 2002 sovereign debt default. It is accused of under-reporting inflation and over-stating growth for political gain, keeping investor confidence low.
The government has made some market-friendly moves, for example with its swap of defaulted debt. But it has also nationalized the pension fund system and imposed price caps and export curbs to try to keep a lid on inflation.
'The main issue affecting Argentina is policy volatility. It all boils down to that,' Bernal said. 'Whenever there's uncertainty, interest rates go high.'
Government spending is high in the run-up to the October 2011 presidential election, with special emphasis on social programs. Annual inflation is estimated by private analysts at above 20 percent.
President Cristina Fernandez has continued the policies of her husband and predecessor, Nestor Kirchner, which are centered on running a trade and primary budget surplus while accumulating foreign currency reserves.
Dollar-denominated GDP warrants traded on Argentina's MAE electronic market were up 0.49 percent on Thursday .
(Additional reporting and writing by Hilary Burke; Editing by Andrew Hay)
((hilary.burke@thomsonreuters.com; +5411-4318-0663; Reuters Messaging: hilary.burke.reuters.com@reuters.net))
((For historical Argentine statistical data in Spanish, please see pages through)) Keywords: ARGENTINA ECONOMY/ (Xtra: To see a calendar of Argentine economic indicators please click on or type in ECONAR on a quote page and press enter. For separate pages detailing Argentine analysts' economic forecasts, click on,, and) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
BUENOS AIRES, Aug 19 (Reuters) - Argentina's economy is seen growing about 8.5 percent this year and 5.5 percent in 2011, the country's deputy economy minister said on Thursday, confirming red-hot growth in Latin America's No. 3 economy.
The government had previously estimated 2010 growth at around 7 percent after the economy slowed sharply during last year's global crisis.
'We're almost certain annual growth will be above 8 (percent), surpassing 8.5 (percent), by the end of the year,' Deputy Economy Minister Roberto Feletti told Reuters. 'The Argentine economy is experiencing a strong recovery.'
The 2011 growth estimate was the government's first as ministry officials draft next year's budget bill, which must be sent to Congress in September.
Argentina's recovery is being driven by robust demand from neighboring powerhouse Brazil, record soy and corn harvests and strong consumer spending.
And investors have been flocking to the country's gross domestic product (GDP) warrants, whose payments rise along with economic growth.
Alberto Bernal, at U.S-based Bulltick Capital Markets investment bank, said Argentine assets in general have been attracting investors in search of high yields.
'Everything to do with Argentina has been seeing incredible demand,' Bernal said. 'If you want to get yield, you have to get creative, and Argentina is one of the few stories around the world that will give you yield.'
Argentina is still seen as a risky bet. That is reflected in its high debt spreads over comparable U.S. Treasuries which only trail behind those of Venezuela and Ecuador, according to JPMorgan's EMBI+ index.
The country is mopping up the final remnants of a massive 2002 sovereign debt default. It is accused of under-reporting inflation and over-stating growth for political gain, keeping investor confidence low.
The government has made some market-friendly moves, for example with its swap of defaulted debt. But it has also nationalized the pension fund system and imposed price caps and export curbs to try to keep a lid on inflation.
'The main issue affecting Argentina is policy volatility. It all boils down to that,' Bernal said. 'Whenever there's uncertainty, interest rates go high.'
Government spending is high in the run-up to the October 2011 presidential election, with special emphasis on social programs. Annual inflation is estimated by private analysts at above 20 percent.
President Cristina Fernandez has continued the policies of her husband and predecessor, Nestor Kirchner, which are centered on running a trade and primary budget surplus while accumulating foreign currency reserves.
Dollar-denominated GDP warrants traded on Argentina's MAE electronic market were up 0.49 percent on Thursday .
(Additional reporting and writing by Hilary Burke; Editing by Andrew Hay)
((hilary.burke@thomsonreuters.com; +5411-4318-0663; Reuters Messaging: hilary.burke.reuters.com@reuters.net))
((For historical Argentine statistical data in Spanish, please see pages through)) Keywords: ARGENTINA ECONOMY/ (Xtra: To see a calendar of Argentine economic indicators please click on or type in ECONAR on a quote page and press enter. For separate pages detailing Argentine analysts' economic forecasts, click on,, and) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.