Argentine Economy Put Double-Digit Numbers on the Board in Second Quarter

The Argentine economy expanded 10.1 percent in the second quarter of 2005 compared to the same period a year ago, the highest since the first quarter of 2004, spurred by investment and private consumption.

According to a release earlier this week from the Ministry of Economy, the second quarter expanded 2.4 percent over the first quarter, piling up a 9.1 percent first-half growth. The surge of the Argentine economy was above market expectations which forecasted a 8.8 percent expansion in the second quarter of the year.

The Argentine economy is thus in its third year straight of strong growth after having registered 8.8 percent in 2003 and 9 percent in 2004. Private consumption is proving to be the main engine of the economy, representing 65 percent of GDP and expanding 10.6 percent in the second quarter of this year.

Investment, which is also crucial for the sustainability of production and to avoid domestic demand generating inflation, also expanded a healthy 24.4 percent following a depressing and worrisome first quarter of barely 13.4 percent.

Attracting foreign investments has become the main target of the Argentine government which is fighting to keep it above the 23 percent of GDP level, penciled in as essential for equipment renewal and satisfaction of growing domestic demand.

The government argues the economy won´t stand such strong jumps in growth in the second half of 2005 since the third and fourth quarters of 2004 were particularly dynamic, having registered 8.9 and 9 percent growths.