The Argentine Economy Recovers Strength

With private expenditure and GDP growth, Wells Fargo sees signs of a recovery in Argentina.

The buzz about Argentina seems to be having an impact on investors of all stripes. After Sunday’s 3-1 defeat of Mexico, global betting sources say the Albiceleste’s odds of winning the World Cup improved to 15/4, third only to Spain and Brazil. Whether sports gambling qualifies as “investing” is certainly open to debate; however, a more sober cadre of long-term investors are also starting to take note.

San Francisco-based financial giant Wells Fargo featured an unlikely subject for this week’s front-page Economic & Financial Commentary: Argentina. The analysis showed Argentina’s 7.9% growth rate in the 4th quarter of 2009 followed by a healthy 6.8% year-over-year rate in 1Q10.

Meanwhile, Argentine private consumption expenditures which rose a mere 0.5% in 2009, grew 7.3% in the first quarter of this year alone. The nation’s spending recovery is also reflected in the current trade balance, as imported goods and services jumped 30% in the first quarter. Unfortunately, exported goods and services only rose 4%, although Wells Fargo notes the strength of the Brazilian economy as a contributing factor in Argentina’s recovery.

While over-dependence on Brazil’s fortunes is a concern, the ongoing China soy conflict highlights the need for 1.) less federal government intervention and 2.) cultivation of more international trade relationships in the Americas, the Euro-zone and Asia. To read the full Wells Fargo Securities report, click here.