Economic activity in Argentina expanded 8.1% in May over a year ago and 8.9% in the first five months of the year according to the country’s Statistics and Census Office, Indec.
The indicator, known by its Spanish acronym as Emae, takes into account most of the components used to calculate GDP.
The Emae May indicator was boosted by industrial activity which soared 9% in May compared to the same month last year. This was basically achieved because of the good performance of the automobile sector, steel production and minerals linked to construction activities.
More specifically the auto sector soared 28.7%, steel, 10.2% and tyres, 14%. Minerals linked to construction such as cement increased 19.6%, glass, 10.7% and other materials, 11.4%.
The Argentine economy also expanded strongly because the foreign trade surplus in May this year was 1.68 billion US dollars compared to 1.9 billion a year ago
This meant that during May exports increased 24% to 8.04 billion dollars, while imports jumped 39% to 6.4 billion, compared to a year ago. But the rise in imports was linked to the purchase of capital goods.
Construction again played a leading role having expanded 14% in May 2011 over May 2010, which was the highest inter annual record so far this year, reports Indec.
The highest previous was December 2010 with 20%.
However consumption was less dynamic according to May sales in supermarkets and shopping malls. In the first case sales were up 14% over a year ago, but only 1% compared to April. Similarly with shopping malls, 10.3% May to May but down 0.6% over April.
Strong demand for Argentina's grains and manufactured goods abroad and elevated government spending are fuelling a major expansion in Latin America's third-largest economy.
Deputy Economy Minister Roberto Feletti said the government's latest forecast is for an 8.2% expansion in the economy this year. That comes on the heels of 9.2% in 2010.
However, an overheated economy and lax monetary policy has translated into one of the highest levels of inflation in the Western Hemisphere. Most private-sector forecasts put annual inflation at above 20%.
Last week Eclac, the Economic Commission for Latin America and the Caribbean, estimated that the Argentine economy would expand this year, 8.2%, the highest in the region only second to Panama with 8.6%.
The 2011 GDP expansion for South America has been estimated at 5.1%.