Argentina's economy grew at its fastest pace in nearly two years in March, expanding 8.1% from a year earlier as strong industry activity strengthened a recovery, according to government data.
Increasing auto production, rising consumer spending and a rise in farm exports have helped lift Argentina's economy. The March economic growth sharply exceeded analysts forecast and was the quickest since July 2008.
The monthly economic activity indicator, known as EMAE and which measures most components of GDP, was up 1% in March versus February. Growing demand in Brazil is fuelling automobile production in Argentina.
But there were other signs that Latin America's third largest economy is leaving last year's sharp slowdown behind it. Factory production soared in April and the trade surplus narrowed as demand for imported goods continued to pick up.
Argentine industrial production rose 10.2% in April from the same month last year. In another data also released Friday, Argentina's trade surplus shrank by 15% in April from the same month a year ago to 1.93 billion US dollars.
In the first five months of 2010 the trade surplus closed a 4.065 billion, in comparison to the 5.878 billion of January-April of 2009. During April, exports rose 19%, which added 6.033 billion, and imports 4.101 billion, 48%more than the same month last year.
While analysts say the outlook this year for industrial production, a key indicator of the economy, is positive, they warn high inflation could boost wage demands and erode the local currency's competitive edge over trade partners.
Private economists forecast inflation at between 20% and 30% by year's end.
Government data also showed Argentina's unemployment rate dipped to 8.3% in the first quarter, down from 8.4% in the first three months of 2009. The jobless rate also dipped from the fourth quarter, when it stood at 8.4%.
The Argentine economy grew 0.9 percent in 2009, according to the government, but many analysts say it contracted by 2% or more. Government and private analysts forecast growth of 5% or higher for this year.
Meantime the fiscal surplus registered in April reached 1,883.9 billion pesos, meaning an increase of 123% compared to the same month in 2009, according to Economy Minister Amado Boudou.
This data reflects the return of Argentina, once the country recovers from the crisis, to the crux of economic growth, and the strengthening of economic balance and government accounts, said the minister during a press conference on Friday.