Argentina's industrial output growth slowed in August to 5.2% year-on-year, while month-on-month economic activity contracted in July for the first time in 13 months, the government said on Friday.
Factory output growth tends to cool during the southern-hemisphere winter due to energy shortages, affecting economic activity as well. Beyond that, the government foresees a gradual slowdown through 2012.
Industrial production in August grew at the slowest year-on-year pace since January 2010, and expanded 0.1% versus the previous month, the INDEC statistics agency said.
Argentina's factory output had grown 7.1% year-on-year in July and 1.6% in July from June.
Brazil, the top market for Argentine car exports, decided in May to delay import licenses for foreign-made cars, which could further hurt industrial output.
Some sectors are operating close to capacity, and analysts say more investment will be needed to keep up output growth in the medium term.
Longer-term growth prospects could be affected by soaring inflation (above 23%) and rising wage demands by trade unions, which undermine the Peso currency's competitive edge. Industry output soared 10.1% in August 2010.
Argentina's economy grew 7.6% in July from a year ago, but short of the 9.4% registered a month earlier.
The EMAE economic activity index, a close proxy for GDP, which is reported quarterly fell 1.2% in July from June, marking its first month-on-month decline since June 2010.
The economy had expanded 0.4% in June from May. The government upwardly revised June's economic activity growth to 9.4% year-on-year from 8.2% previously, adjusting the EMAE to reflect quarterly GDP data.
High global commodities prices are helping stoke growth in Argentina, the world's biggest exporter of soy-oil and soy-meal and the No. 2 global corn provider after the United States.
Increased state spending before October's presidential election has further stoked economic growth in recent months.
Argentina's budget bill sees an 8.3% expansion this year slowing to 5.1% in 2012.