MercoPress. South Atlantic News Agency

Argentina’s economy recovering in May and trade surplus above estimate

Strong demand for cars, soybeans and corn are helping the trade balance

Argentina's economic growth sped up slightly in the first quarter and May's trade surplus was above expectations according to the latest release on economic data. GDP was up 3% from a year earlier and 1.5% from the fourth quarter of 2012.

This compares with a 2.1% year-on-year increase in the fourth quarter and an upwardly revised 1.5% expansion versus the third quarter.

Argentina’s economy has cooled abruptly after booming during most of the last decade. Weak external demand, high inflation and the negative impact of state currency controls and import curbs on investment are seen as some of the problems causing such a situation. GDP slowed to 1.9% in 2012 from 8.9% in 2011.

Argentina is accused of misreporting inflation and growth data and faces potential sanctions from the IMF, which in February reprimanded the country over the quality of its data.

May's trade balance data showed the surplus narrowed 3% from a year ago to 1.34 billion dollars. Imports jumped 17% in May from a year earlier to 7.09bn, driven mainly by a big jump in the purchase of capital goods - including railroad cars and engines from China - and parts and accessories for capital goods.

Fuel imports rose just 5% year-on-year in May but surged 29% in the January-May period as a whole.

Meanwhile, exports rose 14% to 8.43bn, bolstered by vehicle exports to neighbouring Brazil as well as soybean and corn shipments, which have increased after a drought crimped production last year.

The trade surplus in the first five months of the year shrank by 34% versus the same period of 2012. This is bad news for the government, which relies on the surplus to boost dollar supplies on the tightly controlled currency market.