WRAPUP 3-Argentine economy showing signs of a recovery

* Argentine economy grew 5 pct in December yr/yr

* January industry output below market forecasts

* Primary budget surplus narrows 48.5 pct in January
(Updates with primary surplus data)

By Kevin Gray

BUENOS AIRES, Feb 19 (BestGrowthStock) – Argentina’s economy grew
more than expected in December but industrial output fell below
market forecasts in January amid signs an economic recovery is
underway in Latin America’s No. 3 economy.

The economy expanded by 5.0 percent in December from a year
earlier, the National Statistics Institute, or INDEC, reported,
beating market expectations of a 3.0 percent increase.

Industrial production rose 5.2 percent in January from the
same month last year, but came in below the median forecast of
7.2 percent in a Reuters poll.

Official Argentine data has been widely questioned by
economists who say the government is underreporting inflation
and exaggerating growth and industrial production for political
reasons.

Still, most analysts agree the economy is rebounding from a
sharp slowdown last year brought on by the global financial
crisis.

“We expect real activity to pick up additional momentum in
2010, with real gross domestic product growth expected to
accelerate to around 4.0 percent,” said Alberto Ramos, a senior
economist at Goldman Sachs.

Automobile production jumped 66.7 percent in January
compared with the same period in 2009, continuing to drive
increased industrial output.

Some two-thirds of cars produced in Argentina, Latin
America’s third-largest carmaker, are shipped to Brazil, where
demand has been helped by government tax breaks.

The chemicals sector expanded by 33 percent and synthetic
fabric production rose 175.4 percent, INDEC said.

“We expect the industrial sector to show firming signs of a
recovery in the coming months as the investor cycle stabilizes
and foreign demand strengthens as growth is picking up some of
(Argentina’s) main trading partners, particularly Brazil,”
Ramos said.

The monthly economic activity indicator, or EMAE, grew 1.8
percent in December versus November, INDEC said. It measures
most components of gross domestic product and is considered a
close proxy.

The Argentine economy grew 0.9 percent in 2009, according
to the government, but many analysts say the economy contracted
by 2 percent or more.

The government forecasts growth of 2.5 percent this year.

Argentina’s primary budget surplus narrowed 48.5 percent in
January from the same month last year to 1.03 billion pesos
($262.3 million), the government reported on Friday.

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(Reporting by Juliana Castilla and Walter Brandimarte; Writing
by Kevin Gray; Editing by Dan Grebler)

WRAPUP 3-Argentine economy showing signs of a recovery