MercoPress. South Atlantic News Agency

Argentine economy steaming ahead

Argentina's GDP expanded 8% in the first quarter of 2005 compared to the same period a year ago, and 0,5% over the fourth quarter of 2004, according to the latest release from the Statistics and Census Office.

However the Argentine economy performance also showed that gross domestic investment expanded at an annualized 13,9% which represents a considerable slowing down compared to other previous quarters.

Actually in 2004 gross domestic investment increased 34,4% as a consequence of the following quarterly results: I, 50,3%; II, 36,8%; III, 33,6% and IV, 23,6%.

Argentine Economy Minister Roberto Lavagna has on several occasions said that Argentina needs an annual investment of 23% of GDP to sustain a long term growth of 4 to 4,5%. The figure for 2004, clearly an expansion year, was 21%.

The Argentine economy is expected to end 2005 with a 6% growth, although some private analysts believe the forecast can be higher.

At the current rate the Argentine economy, says the latest Statistics report, has overtaken the 1998 II quarter figures which was the peak before the four years of recession that followed.

First quarter figures compared to the same period in 2004, indicate that manufacturing increased 6%, construction 16,3% and services 7,6% with a significant influence from retailing 10,1% and transport, storage and communications 14,4%.

Global supply increased 8,8% and global demand 13,9% with private consumption representing 8% and government 4,1%.

Furthermore May statistics show industrial production expanding 8,5% over the same month a year ago and 1,2% over April 2005.

During the first five months of 2005, manufacturing increased 7,4% with a 70,6% production capacity. Steel and aluminium foundries are working at full steam 98,3% capacity as well as oil refining, 83,8%. Car manufacturing on the other hand is showing less dynamism with 59% production capacity.