Argentina’s GDP expanded 9.4% in the first half of the year compared with the same period in 2009, according to the latest release from the country’s Statistics Institute, Indec. But inflation is becoming a greater challenge as the country moves into presidential electoral year 2011.
Indec said that growth in the second quarter (April-June) was 3% over the previous period (Jan-March) which was also 3% over the earlier quarter.
High government and consumer spending, a manufacturing rebound, excellent crops and booming trade with the country’s main partner Brazil have helped to fuel the extraordinary performance of Latinamerica’s third economy
But strong growth has led to sharp increases in expectations for the rest of the year and inflation according to private economists is running at over 20% annually. Controversial government figures put the inflation rate at half that percentage.
According to private estimates and the Central Bank Argentina is poised to expand between 8.9% and 9.5% this year. This compares most favorably with 2009 when the economy slowed down to 0.9%, said the government. However private think-tanks dispute this and argue the Argentine economy last year contacted.
Precisely to combat last year’s slowdown the government boosted public spending to stimulate domestic demand which is expected to remain high through next year ahead of October 2011 presidential election.
Indec says the 11.8% jump in the second quarter was the highest year-on-year quarterly increase since at least 1994 a year after the agency incorporated a new statistics system.
But some analysts think official data is overly rosy when it comes to economic activity.
”Official statistics overestimate growth ... for us real growth is around 9 percent, which is still an excellent number, said former Finance Secretary Miguel Kiguel.
Last week the Argentine government presented before Congress its 2011 budget bill in which it forecasts economic growth at 8.9% this year and 4.3% in 2011.