Argentina's unemployment rate was 6.7 percent in the fourth quarter of 2011, President Cristina Fernandez said on Wednesday, sinking below the 7 percent barrier for the first time in her government.

Latin America's No. 3 economy is growing at one of the region's fastest rates fueled by government-stimulated consumer demand, grains exports and industrial output.

Unemployment was 7.2 percent in the third quarter of last year and 7.3 percent in the fourth quarter of 2010.

“For the first time we penetrated the 7 percent mark. The lowest we had before was 7.2 percent,” Fernandez said in her first appearance after undergoing thyroid surgery on January 4.

Joblessness is at its lowest in two decades but analysts say keeping people in jobs will be a leading challenge for Fernandez as the global economic outlook worsens.

The combative 58-year-old leader addressed a crowd assembled in the presidential palace, chiding her political enemies and speaking for nearly an hour about the economy.

She was diagnosed with thyroid cancer last month, but after having the gland removed on January 4, her doctors said no cancer was found. Still dressed in black after the 2010 death of her husband and predecessor as president Nestor Kirchner, Fernandez appeared smiling and healthy but with a scar on her throat.

“If I wore a scarf to cover it, tomorrow Clarin (an opposition newspaper) would say 'She wasn't operated on,'“ Fernandez jested.

“Politics before aesthetics, dear,” she said to laughter and applause.

Fernandez started her second term last month, vowing to deepen policies begun by Kirchner. He died suddenly in October 2010, robbing Fernandez of her closest advisor and power broker and raising questions about the future of her government.

But the president was bolstered by public sympathy and strong economic growth, gauged by government officials at more than 9 percent in 2010 and 2011. She won re-election by a 54-percent landslide in October.

Kirchnerist policy is rooted in Peronism, named after the late leader Gen. Juan Peron. It is characterized by generous welfare spending, growth-oriented economic policies, import substitution and the absence of inflation targeting.

This year looks to be a challenging one as Argentina faces fallout from Europe's financial meltdown and slowing demand from No. 1 trade partner Brazil and key commodities client China.

Argentine workers are demanding pay raises in line with inflation estimated by private economists at more than 20 percent, fueling the risk of labor unrest. - Reuters