By: Shane Romig
BUENOS AIRES (Dow Jones)--Argentina's economy likely continued to grow by leaps and bounds in February due to surging consumer demand, strong exports, and high government spending ahead of presidential elections slated for October.
The median estimate of eight economists surveyed by Dow Jones Newswires expects the government to report an 8.6% year-on-year gain in its monthly economic activity indicator, or EMAE, for February.
The national statistics agency, Indec, is scheduled to publish the EMAE--which comprises most components of gross domestic product--at 3 p.m. EDT Monday.
Analysts are expecting another year of steep growth this year and a number have recently revised upwards their 2011 GDP forecasts.
Nomura Securities International lifted its growth outlook for Argentina's economy this year to 8% from 5% on the back of what it described as a consumption boom Friday.
On March 21, Goldman Sachs said it expects gross domestic product to expand 6.8%, up from its previous forecast of 5.6%.
The Central Bank of Argentina expects the economy to grow at least 6% this year, following a 9.2% expansion in 2010.
The automobile sector is booming amid the growth and as consumers pour money into durable goods as a hedge against inflation.
In March, car makers cranked out 70,487 vehicles, up 34% on the year. Exports surged 55% to 38,994, with over 80% of those shipments going to neighboring Brazil.
Growth is also being helped by bumper crops and surging global commodity prices. Argentina is the world's second largest corn exporter, third in soybean shipments and the top exporter of soymeal and soyoil.
But while the economy is booming, there are worries over runaway inflation due to very loose monetary policy as the central bank rapidly expands the money supply.
Most private-sector economists in Argentina say inflation is running at over 20%, although widely-discredited government data points to a rate about half that.
The credibility of Indec's economic data--especially data on inflation--has been called into question since former President Nestor Kirchner replaced long-serving staff with political appointees in 2007, which led to a sharp divergence between government data and private-sector estimates.
The government of President Cristina Fernandez, Kirchner's widow, denies allegations that it manipulates Indec data. The administration regularly downplays the seriousness of inflation, attributing whatever pricing pressures that might exist in the economy to supply constraints and price gouging.
However, there are moves to replace the current consumer price index, which only measures prices in the greater Buenos Aires area, with a nationwide index. Earlier this month, the International Monetary Fund presented a report to Argentine authorities with specific recommendations for developing the new index, after the government had asked for the fund's assistance.
Despite the worries, Economy Minster Amado Boudou said Friday that inflation is under control, and that the government has moved quickly to deal with any spike in prices in specific parts of the economy.
Speaking to reporters at the Group of 20 meeting of finance officials in Washington, Boudou said that the government would continue to push for blistering growth.
"We are convinced that we have to accelerate in Argentina," Boudou said.
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