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Growth continues to accelerate amid broad-based recovery
The monthly indicator for economic activity (IMAE, Estimador Mensual de
Actividad Económica) increased 9.4% in September over the same month
last year. The September figure represented an increase when compared to
the 8.1% rise observed in the prior month and lifted growth for the
third quarter to 8.7% over the same quarter last year. In seasonally
adjusted terms, economic growth was unchanged over August, when the IMAE
had risen 0.1%.
Industry
bolstered by more favourable export environment and pickup in investment
More recent data indicate the economic activity remained robust at the
beginning of the fourth quarter of the year. According to National
Statistical Institute (INDEC), industrial production rose 17.2% in
October over the same month last year, which was up from the 15.0%
expansion observed in the prior month. Growth remained very strong in
most sub-sectors, with printing and publishing, machinery equipment and
non-metal mining expanding at rates close to 50% over the same month
last year. The only sub-sector to experience a contraction was oil
processing, where activity dropped 1.2% over October 2002. In seasonally
adjusted terms, industrial output spiked 2.6% over September.
Construction sector booming
Similarly, construction continued to grow strongly. In October,
construction output rose 44.3% over the same month last year, unchanged
from the growth rate observed in the previous month. Within the
construction industry, all sub-sectors registered double digit growth
rates, with infrastructure projects and housing leading the way. The
slowest growth rate was registered in oil-related construction, where
activity still rose 23.8% over the same month last year. In seasonally
adjusted terms, activity was up 5.2% over the previous month, an
acceleration from the 3.8% pace observed in September.
Consumption bolstered by public sector
Supermarket sales figures indicate that private consumption remains
subdued amid continued high unemployment and tight credit conditions. In
September, real supermarket sales rose just 1.8% over the same quarter
last year, which was down from the 2.4% growth pace observed in the
previous month. In seasonally adjusted terms activity rose just 0.1%
over August, when sales had risen 0.7%. Public sector consumption is
likely to have compensated for the more moderate growth pace in the
private sector’s consumption activities, since growth reached 14.1% in
October over the same month last year. The October figure was up from a
12.3% expansion registered for the same period in September. Key behind
the robust growth pace in public sector consumption were cargo and
passenger transport services.
Investment continues strong expansion
Capital goods imports rose 64.5% in October over the same month last
year. Even though the October figure was below the more robust 83.4%
expansion observed in the previous month, total annual capital goods
exports grew 34.7% over October 2002, which was up from 27.6% in the
previous month. The combination of accelerating capital goods import
growth and the strong surge in the construction sector indicate that
investment activities are likely to have experienced healthy growth in
the third quarter of the year.
Outlook for this year still strong but growth expected to moderate in
2004
The continued favourable growth trajectory observed in the final months
of the year has prompted Consensus participants to yet again revise
their estimates for this year upward by 0.3 percentage points to the
current 6.8%. This month’s Consensus, however, is below the official
figure of 7.0% announced by the government in October. The combination
of lower export growth and deceleration of domestic demand growth next
year will prompt a slowdown in the gross domestic product’s (GDP)
expansion, which is seen moderating to a 4.9% pace in 2004, up 0.2
percentage points from last month. The current Consensus figure,
nevertheless, remains above the official projection of 4.0% underlying
the 2004 budget proposal.
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