Crisis-weary Argentines rein in spending

Wed Dec 17, 2008 12:09pm EST
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By Karina Grazina

BUENOS AIRES (Reuters) - Buffeted countless times by economic crises, Argentines are snapping shut their wallets to brace for the worst as a global slump spills over into their economy.

Auto sales took a dive last month, and people are spending less freely at shopping centers and restaurants as a six-year consumer spending spree slows dramatically.

After five years of booming growth, Argentina's economy is expected to expand at a still robust rate of around 7 percent in 2008 but it has stumbled in the last couple of months and economists forecast very low growth next year, or even a recession.

"We're only buying the basics until we see what will happen next year. We're not buying much clothing, we go out to eat less often. We have set costs we have to pay but we're trying to be very austere with the rest," said Veronica Festian, a married woman in her 30s who works at a tourism agency.

"You never know what's going to happen here, so I prepare for the worst," Festian said.

Some jumpy Argentines are taking their money out of banks and converting their pesos into dollars to shield themselves from a deposit freeze, such as the one ordered during a 2001-2002 economic depression, or a devaluation.

"I don't know how much the global crisis will hurt us here, but I'm sure it's going to be a big blow. The only thing I can do is wait to see what happens -- and take every last cent out of the bank," said Jorge, a 40-something office worker.

Scars from the economic and social crisis seven years ago have not yet healed despite political stability and economic growth averaging 8.8 percent a year from 2003 through 2007.   Continued...

<p>A woman and children beg in downtown Buenos Aires, December 15, 2008. REUTERS/Enrique Marcarian</p>