By Kevin Gray
BUENOS AIRES, June 18 (Reuters) - Argentina's economic recovery gathered steam in the first quarter and industrial output surged in May, the latest signs Latin America's No. 3 economy is rebounding from a sharp slowdown last year, data showed on Friday.
Gross domestic product expanded a faster-than-expected 6.8 percent in the first quarter compared with the same period a year ago, and grew 3 percent from the October-to-December period, the INDEC national statistics agency said.
'The economy is growing rapidly,' said Gustavo Ber, an economist and investment consultant in Buenos Aires. 'This should help generate a positive atmosphere for investments and could help drive up prices of Argentine debt.'
Coupon payments on some of Argentina's bonds are linked to economic growth, and healthier expansion increases the value of the paper.
Domestic consumption and growth in the services sector helped to power growth, INDEC said.
Industrial production soared in May, climbing 10.2 percent from the same month last year and well above the median forecast of 9.5 percent in a Reuters poll.
Rising auto production is driving industrial output, helped by heady economic growth in Brazil, Argentina's biggest trade partner and a major buyer of Argentine vehicles.
Automobile output rose 40.5 percent in May versus the same month last year and output in the textile industry rose 26.5 percent year-on-year, INDEC reported.
Argentina's official economic data has been widely questioned for more than two years as private economists accuse the government of overstating growth and underreporting inflation for political gain.
But most analysts agree the economy is again growing strongly.
'The economy is now experiencing a solid cyclical rebound backed to a large extent by a supportive external backdrop -- booming external demand mostly from Brazil, supportive commodity prices ... but also by very lax fiscal and monetary policies,' Alberto Ramos, a senior economist for Goldman Sachs in New York, wrote in a report.
The Argentine economy grew 0.9 percent in 2009, according to the government, but many analysts say it contracted by 2 percent or more.
The government forecasts growth of 5 percent this year.
Argentina posted a $365 million deficit in the first quarter versus the same period a year earlier, when it registered a $1.50 billion surplus, the government reported on Friday.
'We expect the current account to be supported during the second and third quarters by the expected significant and seasonal increase in agricultural exports,' Ramos said.
Argentina is one of the world's leading producers of soy, wheat and corn. The country's soy harvest, which is expected to be a record 54 million tonnes this season, will likely propel growth in the second quarter of this year, analysts say.
(Reporting by Luis Andres Henao, Juliana Castilla and Jorge Otaola; Writing by Kevin Gray; Editing by Dan Grebler) Keywords: ARGENTINA ECONOMY/ (kevin.gray@thomsonreuters.com; +5411-4510-2505; Reuters Messaging: kevin.gray.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
BUENOS AIRES, June 18 (Reuters) - Argentina's economic recovery gathered steam in the first quarter and industrial output surged in May, the latest signs Latin America's No. 3 economy is rebounding from a sharp slowdown last year, data showed on Friday.
Gross domestic product expanded a faster-than-expected 6.8 percent in the first quarter compared with the same period a year ago, and grew 3 percent from the October-to-December period, the INDEC national statistics agency said.
'The economy is growing rapidly,' said Gustavo Ber, an economist and investment consultant in Buenos Aires. 'This should help generate a positive atmosphere for investments and could help drive up prices of Argentine debt.'
Coupon payments on some of Argentina's bonds are linked to economic growth, and healthier expansion increases the value of the paper.
Domestic consumption and growth in the services sector helped to power growth, INDEC said.
Industrial production soared in May, climbing 10.2 percent from the same month last year and well above the median forecast of 9.5 percent in a Reuters poll.
Rising auto production is driving industrial output, helped by heady economic growth in Brazil, Argentina's biggest trade partner and a major buyer of Argentine vehicles.
Automobile output rose 40.5 percent in May versus the same month last year and output in the textile industry rose 26.5 percent year-on-year, INDEC reported.
Argentina's official economic data has been widely questioned for more than two years as private economists accuse the government of overstating growth and underreporting inflation for political gain.
But most analysts agree the economy is again growing strongly.
'The economy is now experiencing a solid cyclical rebound backed to a large extent by a supportive external backdrop -- booming external demand mostly from Brazil, supportive commodity prices ... but also by very lax fiscal and monetary policies,' Alberto Ramos, a senior economist for Goldman Sachs in New York, wrote in a report.
The Argentine economy grew 0.9 percent in 2009, according to the government, but many analysts say it contracted by 2 percent or more.
The government forecasts growth of 5 percent this year.
Argentina posted a $365 million deficit in the first quarter versus the same period a year earlier, when it registered a $1.50 billion surplus, the government reported on Friday.
'We expect the current account to be supported during the second and third quarters by the expected significant and seasonal increase in agricultural exports,' Ramos said.
Argentina is one of the world's leading producers of soy, wheat and corn. The country's soy harvest, which is expected to be a record 54 million tonnes this season, will likely propel growth in the second quarter of this year, analysts say.
(Reporting by Luis Andres Henao, Juliana Castilla and Jorge Otaola; Writing by Kevin Gray; Editing by Dan Grebler) Keywords: ARGENTINA ECONOMY/ (kevin.gray@thomsonreuters.com; +5411-4510-2505; Reuters Messaging: kevin.gray.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.