Argentina's economic recovery picked up speed in July, expanding 4.9% from a year earlier as President Mauricio Macri's pro-growth policies appeared gain traction. July's year-over-year expansion is the highest posted by Argentina in more than two years and it moves the country closer to hitting its target of 3% growth this year.
The economy also grew 0.7% in July from the previous month on a seasonally adjusted basis, the national statistics agency reported Wednesday.
Going forward, we expect the cyclical economic recovery to strengthen and broaden driven by firm private consumption and a growing impulse from public investment, Goldman Sachs economist Alberto Ramos said in a report.
Manufacturing output is up and retail sales are gaining ground. Private sector salaries, which fell below the pace of inflation last year, are also recovering, leading consumers to spend more on home appliances and other products.
Construction activity is also booming, led by increased public spending on infrastructure projects, expanding private sector credit and rising interest from companies and property developers to erect new buildings. Argentina's nascent mortgage market, which had effectively been extinct since 2001, is also slowly spurring investment.
Economic growth continues to accelerate, an Argentine official said Wednesday. Growth has extended to almost all sectors, to 13 of 15 sectors measured.
Argentina also revised its previous year-over-year growth estimate for June to 4.2% from 4% while it lowered its earlier estimate for April growth to 0.3% from 0.5%.
Gabriel Caamaño, an economist at Consultora Ledesma, a research firm, said the economy will have to expand by at least 4.4% on a year-on-year basis for the rest of 2017 for the government to reach its 3% growth target this year.