UPDATE 1-Argentine economy grows 9.5 pct in January

* Economy expands 9.5 percent year-on-year

* Increase of 0.5 pct from December shows sustained boom
(Adds analyst, background)

BUENOS AIRES, March 28 (Reuters) – Argentina’s economy grew
a scorching 9.5 percent in January year-on-year (AREAI=ECI: Quote, Profile, Research) and
also expanded from the previous month, showing a boom has yet
to peak, state statistics agency INDEC said on Monday.

Strong growth in Latin America’s No. 3 economy is being
driven by robust consumer spending, lucrative grains exports
and industrial production led by the automotive sector and
booming exports to regional powerhouse Brazil.

January’s figure exceeded market expectations of 9.0
percent growth, according to the median forecast in a Reuters
poll of seven analysts who expected a year-on-year gain of
between 6.0 percent and 9.4 percent.

The EMAE economic activity index is a close proxy of gross
domestic product, which Argentina reports quarterly.

Argentina’s GDP expanded 9.2 percent last year — one of
Latin America’s fastest rates, although some economists say
widely questioned official data overstates growth.

Such sizzling growth has triggered interest in
growth-linked debt instruments known as GDP warrants.
(ARTVPE3=RRBB: Quote, Profile, Research)(ARTVPY3=RRBB: Quote, Profile, Research)

The center-left government of President Cristina Fernandez
places a higher priority on maintaining brisk economic growth
than tackling surging consumer prices. Inflation is estimated
privately at about 25 percent.

“The year started with a very strong rebound in economic
activity, especially linked to consumer spending and also
factory output, which really jumped during the month,” said
Rodrigo Alvarez, an economist at the Buenos Aires-based
consulting firm Ecolatina.

He said a bumper wheat harvest had also helped the health
of the wider economy after a poor wheat season last year.

Factory output surged 10.3 percent in January, with
automobile production, a key driver of growth in industrial
output, rising 38.6 percent from a year earlier.
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Despite the current boom, some economic analysts are
warning of a slowdown this year as expansive fiscal and
monetary policies stoke inflation and undermine the
sustainability of longer-term growth.

The government revised its data for December’s year-on-year
growth to 10.1 percent from 9.4 percent previously. INDEC also
upwardly revised its November growth measure to 10.1 percent
from 9.8 percent previously.
(Reporting by Luis Andres Henao; Writing by James Matthews and
Helen Popper; Editing by Dan Grebler)

UPDATE 1-Argentine economy grows 9.5 pct in January