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Favourable growth trajectory expected in second half
More recent data show that the recovery of economic activity remains
well under way but that the acceleration of growth rates observed in the
past is drawing to an end. In July, the monthly indicator for economic
activity (IMAE, Estimador Mensual de Actividad Económica) increased 8.8%
over the same month last year, which was only moderately up from the
8.5% expansion observed in June. The July figure represented the
eleventh consecutive monthly improvement. In seasonally adjusted terms,
economic activity rose 1.8% in July over the prior month, when the IMAE
had remained unchanged.
July supermarket sales suggest that limited credit availability and high
unemployment continue to forestall a more pronounced rebound in private
consumption. According to the National Statistical Institute (INDEC),
supermarket sales rose 0.3% in July over the same month last year, which
was an improvement over June, when sales activity dropped 8.6% and
represented the first positive reading since June 2001.
Industrial production also continues along a favourable growth path. In
August, output rose 15.6% over the same month last year, down slightly
from the 16.7% pace observed in July. Metals manufacturing, printing and
publishing output and textile production experienced the strongest
expansions. The recovery in industry remains broad-based, as only
tobacco product output dropped (-1.4% yoy) and most sectors remained in
double digit growth territory.
Similarly, construction activity remains well in double-digit growth
territory. In August, the construction sector’s output rose 32.8% over
the same month last year, down moderately from the robust 45.5%
expansion in the prior month. Growth remained that strongest in
residential housing construction, where activity was up 38.7% over
August last year, while oil-related construction activity exhibited the
lowest growth rate with a 5.2% rise in output.
Expansion to moderate next year
Participants expect the current pickup in economic activity to gain
additional strength in the third quarter but to loose some steam in the
final quarter. As a result, annual growth is expected to reach 6.0% this
year, which is up 0.3 percentage points from last month. The combination
of robust investment activity and a healthy export sector will drive
growth this year, as consumption is likely to expand at a more moderate
pace. The combination of slower export growth and a deceleration in
domestic demand next year, however, will prompt deceleration in economic
activity, which is seen slowing to 4.3%, which is up 0.4 percentage
points from last month.
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