PREVIEW-Argentina May economic growth seen +9.8 pct yr/yr

WHAT: Argentina economic activity in May (AREAI=ECI: )

WHEN: Friday, July 16, at 4 p.m. (1900 GMT)

REUTERS FORECAST: 9.8 percent year-on-year growth,
according to the median. Nine analysts participated in the
survey with forecasts ranging from +6.5 to +10.6 percent

FACTORS TO WATCH: Argentina’s economy is rebounding after a
sharp slowdown in 2009, boosted by public spending and foreign
investment. Growth is also being led by industrial production,
particularly in the auto industry.

Auto production in Argentina rose 39.6 percent in May from
a year earlier, according to data compiled by Argentina’s
Automakers Association (ADEFA) (ADEFA02: ), with strong sales to
neighboring Brazil.

Industrial output (ARECI10: ) grew 10.2 percent in May,
according to official numbers.

Highly accommodative macroeconomic policies, alongside a
sharply undervalued currency in real terms and strong growth in
Brazil, should continue to support economic activity.

Growth is expected to remain strong but will depend on
consumer spending and investment. But some say high growth and
investment could be hit by political uncertainty and annual
inflation estimated at between 25 and 30 percent.

MARKET IMPACT: Robust growth in past months indicates the
economy continues to recover. A threat of overheating, though,
has appeared because of President Cristina Fernandez’s loose
monetary and fiscal policy. High growth boosts state tax
revenue, which is positive for the country’s finances. But
economists widely question government data, saying the INDEC
statistics agency underreports inflation and exaggerates growth
and industrial production for political reasons.

Investors will be watching Argentina’s economic growth
figures to see if they expect a big payout on the country’s GDP
warrants, which are tied to high growth.

LINKS:

Argentina’s bureau of statistics website:
http://www.indec.gov.ar/

For historical Argentine statistical data in Spanish,
please see pages (ARECI09: ) through (ARECI14: )

To see a calendar of Argentine economic indicators please
click on (ECONAR: ) or type in ECONAR on a quote page and press
enter.

For separate pages detailing Argentine analysts’ economic
forecasts, click on: (ARECI05: ) (ARECI06: ) (ARECI07: ) (ARECI08: )
(Reporting by Walter Bianchi and Hilary Burke; Writing by Luis
Andres Henao; Editing by James Dalgleish)

PREVIEW-Argentina May economic growth seen +9.8 pct yr/yr