WASHINGTON -- The United States largely has avoided the fallout from Argentina's financial collapse. That could change if the crisis in South America's second biggest economy worsens.

The worry is that a serious recession and Argentina's plunging currency could spill over to neighbors still trying to emerge from last year's global slowdown -- and eventually reach the United States.

"The global economy remains very fragile with troubles in Argentina, Japan mired in a decade-long recession and Germany struggling," said Mark Zandi of Economy.com. "If something goes badly wrong, it could quickly spread to our economy."

Even so, America's relative insulation from the crisis so far has been striking.

The U.S. economy also survived the last serious currency turmoil, the Asian crisis in 1997-98, even though American investors had a number of nerve-racking moments, especially after Russia defaulted on $40 billion in government debt in August 1998.

That default caused the near-collapse of a giant American investment fund, Long Term Capital Management, and sent stock prices skidding until the Federal Reserve interceded with interest rate cuts.

Argentina's decision in December to halt payment on much of its $141 billion in foreign debt -- the biggest government default in history -- has caused modest ripples so far in the U.S. economy.

Loans written off

American banks with large exposures to Argentina, led by FleetBoston Financial Corp., have written off bad loans. General Motors, Verizon, McDonald's, Coca-Cola and other companies have taken some hits. Their losses, however, are small compared with the profit squeeze all U.S. companies endured in last year's U.S. recession.

Unlike the Asian crisis, Argentina's troubles took time to develop, giving foreign investors warning and leading analysts to play down the chance of a sudden jolt to Wall Street even if the crisis drags on.

"Any real contagion effect like what happened in the Asian crisis would have already occurred," said David Wyss, chief economist at Standard & Poor's in New York. "But that doesn't mean there can't still be economic impacts felt in the United States."

Wyss and other analysts said the bigger threat was to trade rather than the flow of investment.

Argentina's $3.9 billion in purchases accounted for less than one-half of 1 percent of total U.S. exports last year. But U.S. sales to the rest of Latin America could suffer if Argentina's slowdown depresses growth in the region. Brazil, South America's biggest economy, does nearly one-third of its trade with Argentina.

"The Latin American economies, like the rest of the world, are trying to recover from the global recession and Argentina's troubles will be a significant limitation on growth," said Sung Won Sohn, chief economist at Wells Fargo in Minneapolis.

More attention from Bush

Many analysts also are worried about the political impact from the financial turmoil in a region that the past decade has moved to embrace democracy and free-market capitalism.

"The Argentine people are suffering and they are blaming foreign banks, the IMF and the U.S. government," said Zandi. "The whole process of political reform could be undermined."

President Bush took office with a pledge to pay more attention to Latin America. So far, his administration, led by Treasury Secretary Paul O'Neill, has insisted on a tough-love approach, denying billions of dollars in new IMF loans to Argentina until the country goes further with economic reforms.