MercoPress. South Atlantic News Agency

Argentina’s economic activity indicator jumped 8.7% in February

Economy minister Amado Boudou, amateur rock player loves Harley Davidson

Argentina's February monthly economic activity indicator, or EMAE, jumped 8.7% on the year and was up 0.4% on the month, the national statistics agency Indec reported Monday. The EMAE comprises most components of gross domestic product.

With signs that the economy has started off the year with a bang, a number of analysts have recently revised their 2011 GDP forecasts upward. On Friday, Nomura Securities International lifted its growth outlook for Argentina's economy this year to 8% from 5% on the back of what it described as a consumption boom.

At the end of March Goldman Sachs said it expects GDP to expand 6.8%, up from its previous forecast of 5.6%. The Central Bank of Argentina expects the economy to grow at least 6% this year, following a 9.2% expansion in 2010.

The automobile sector is booming as consumers pour money into durable goods as a hedge against inflation. Growth is also being helped by bumper crops and surging global commodity prices. Argentina is the world's second largest corn exporter, third in soybean shipments and the top exporter of soy-meal and soy-oil.

But even with the economy booming there are growing concerns about runaway inflation due to very loose monetary policy as the Central bank rapidly expands the money supply. That and high government spending in the run-up to October's presidential elections are causing prices to soar.

President Cristina Fernandez de Kirchner is widely expected to run for re-election, although she has not publicly announced her candidacy.

Most economists, multilateral organizations and everyday decisions (labor contracts, court rulings) indicate a consensus that inflation is running at 25% to 30% annually. The Cristina Fernandez administration regularly downplays the seriousness of inflation, attributing whatever pricing pressures that might exist in the economy to supply constraints and price gouging.

Despite the worries, Economy Minster Amado Boudou said Friday that inflation is under control, and that the government has moved quickly to deal with any spike in prices in specific parts of the economy. Furthermore speaking at the Group of 20 meeting of finance officials in Washington, Boudou said that the government would continue to push for faster growth, “we are convinced that we have to accelerate in Argentina”.