Argentina Exits Recession in Second Quarter

Argentina exited recession with 0.9-percent economic growth in the second quarter, national statistics institute INDEC said Wednesday, a rare bit of good news amid the country's new debt default.

But with inflation estimated at more than 30 percent and the value of the peso tumbling, Latin America's third-largest economy is still mired in a slowdown after averaging 7.8-percent annual growth from 2003 to 2011.

Economic analysts are forecasting the economy will shrink two percent this year, though the government is forecasting a return to economic growth of 2.8 percent in 2015.

The end of the boom has revived the ghost of Argentina's 2001 economic crisis, when it defaulted on $100 billion in debt and deadly riots erupted in the streets.

The government's bid to restructure its defaulted debt has been derailed by a U.S. court battle with two hedge funds demanding full payment on their Argentine bonds.

The "vulture funds," as Buenos Aires calls them, won a $1.3-billion ruling in their favor and a court order blocking Argentina from paying creditors who agreed to take losses of up to 70 percent on their bonds until it settles the dispute.

Unable to service its restructured debt, the South American country entered default again in July.