MercoPress. South Atlantic News Agency

Argentine economic activity expands 7.8% in March over a year ago

UIA president Jose Ignacio de Mendiguren

Economic activity in Argentina expanded 7.8% in March compared to the same month a year ago and 0.5% over February, according to the provisional percentages from the government’s National Statistics Institute, INE.

The data is provided by the Economy Activity Monthly Estimate, EMAE which Indec delivers every month, providing an anticipation of GDP evolution which is officially released every quarter.

This year began with year-to-year increases of 9.5% in January and 8.7% in February.

March’s performance is based on good showings from all sectors among which industrial production with an 8.8% expansion. In the manufacturing sector the auto industry outstands with 29.4%.

Economic activity expanded 9.2% in 2010, year-to-year which represented a huge boost compared to the 0.9% of 2009 in the context of the world’s slowdown, according to Indec.

Taking advantage of soaring commodities prices and landslide earnings Argentina has been growing sustainedly ‘at Chinese rates’ since 2002 when the default and the melting of the economy.

But as the economy recovered domestic costs have been increasing as the original margin of an undervalued Peso which helped boost exports has eroded, and a competitiveness controversy has surfaced.

Some manufacturing sectors faced with rising costs and poor efficiency are again lobbying for Argentina to devalue the currency which the government has managed to retain from appreciating steeply as has been the case in the rest of Mercosur partners and most of South America under strain from a massive inflow of capital.

However the president of the Argentine Industrial Union, UIA, has stated that “Argentina had economic problems when it was short of dollars, but today those are not the circumstances, rather the contrary”.

“I believe that the inflow of dollars generated by our foreign trade enables the government to manage with no haste issues related to foreign exchange policy”, said UIA president Jose Ignacio de Mendiguren.

“Some are convinced that competitiveness is basically solved with a devaluation of the currency, we are absolutely against such a position. The exchange rate is one of the many tools of economic policy and promoting competitiveness”, pointed out de Mendiguren.