Economy to go 8% up

Economy growth rhythm hit 1.1 per cent in May against the previous month, accumulating, during the first five months of the year, an 8-per cent interannual increase.

The Argentine Statistics Agency (INDEC) will reveal on Wednesday data on the Monthly Economic Activity Estimator (EMAE), which will show that GDP keeps on growing at a fast pace. In interannual comparison, last May also posts an 8-per cent hike.

Activity level energy offers the possibility of holding a growth record, accumulated during the last 24 months, of 19.2 per cent; of 28 per cent in the last 3 years and of 38 per cent since May 2002.

This piece of information is linked to main analysts' prospects, since average estimates a positive variation of 8 per cent. In that sense, annual estimate settles GDP with an expansion rate near 8 per cent and 6 per cent for 2007.

Boosters

Although aggregate performance has not been revealed yet, domestic demand is the one boosting GDP growth, particularly local consumption and investment, and in that sense, private consumption. Investment (mainly that linked to construction) is also a mainstay of growth.

However, external sector made negative contributions. From the sector point of view, the farming world will also have an adverse impact, while industry, construction and financial intervention work in favour.

This data would show that government income policy maintains most domestic demand dynamics, plus public spending increase during the last months.

As regards the second half of the year, some analysts express their doubts about Argentine economy's capacity to absorb wage rises without triggering further inflationary pressures, an issue greatly worrying Economy Minister, Felisa Miceli.