MercoPress. South Atlantic News Agency

Argentine economy expands 10,1% in second quarter

The Argentine economy expanded 10,1% in the second quarter of 2005 compared to the same period a year ago, the highest since the first quarter of 2004, spurred by investment and private consumption.

According to a release Thursday from the Ministry of Economy, the second quarter expanded 2,4% over the first quarter accumulating a first half 2005 growth of 9,1%.

The surge of the Argentine economy was above market expectations which forecasted a 8,8% expansion in the second quarter of the year.

The Argentine economy is thus in its third year of strong growth after having registered 8,8% in 2003 and 9% in 2004, with the 2005 first quarter expansion, 8%.

Private consumption is proving to be the main engine of the economy representing 65% of GDP, and expanding 10,6% in the second quarter of this year.

Investment which is also crucial for the sustainability of production and to avoid domestic demand generating inflation also expanded a healthy 24,4% following a depressing and worrisome first quarter with 13.4%.

Attracting foreign investments has become the main target of the Argentine government which is fighting to keep it above the 23% of GDP level, considered essential for equipment renewal and satisfying the growing domestic demand.

According to the Argentine Statistics Institute investment in production equipments surged 35,7% during the second quarter compared to the same period in 2004.

The construction industry which in the second quarter was responsible for 60% of overall investment expanded 17,9% over April-June 2004.

This week the Argentine Executive sent to Congress the 2006 budget message with a growth estimate of 4%, following this year's (underscored) 7,3%.

The government argues that in the second half of 2005 the economy won't stand such strong jumps in growth since the third and fourth quarters of 2004 were particularly dynamic having registered 8,9 and 9% growth.

The not so bright side of the current situation is that four million Argentines still have employment difficulties with the unemployment rate standing at 15,7% last June. If the family allowance programs are included the percentage drops to 12,1%.

However 12,8% are under employed or have temporary jobs.

Argentina's labour force is estimated in 15,5 million people.