SIGNIFICANCE: In the last four years, the Argentine economy has grown at an average rate of nearly 9%. Figures for the first five months of 2007 showed a slight slowdown to 8.2%. However, this deceleration could intensify in the second half of the year, as suggested by investment indicators.  

ANALYSIS: Foreign direct investment (FDI) in Argentina recovered in 2002-06, rising at an average annual rate of 26% over that period. However, after growing by 11.2% in the first quarter of 2006, in the first three months of 2007 it contracted by 56.1% to 624 million dollars. The contraction was mainly accounted for by negative reinvested earnings of 374 million dollars, compared with positive reinvested earnings of 742 million dollars in the same period of 2006. Equity contributions fell by only 3.2% to 383 million dollars. By contrast, changes in ownership showed a positive record of 130 million dollars, in comparison with no transactions at all in the first quarter of 2006.