WRAPUP 3-Surging Argentine industry output boosts growth

* Factory output up 10.1 pct year-on-year

* Economic growth gathers speed, rising 8.5 pct yr-on-yr

* Trade surplus widens 22.8 percent, first rise since Jan.

* Grains exports up 200 pct in September yr-on-yr
(Adds fresh analyst quote, minister, context)

By Helen Popper

BUENOS AIRES, Oct 22 (BestGrowthStock) – Argentina’s industry
output soared 10.1 percent in September from a year earlier,
and also rose from the previous month — another sign the
country’s economic growth remains strong, data showed on
Friday.

Latin America’s No. 3 economy is expanding at one of the
fastest rates in the region, fueled by strong demand for
Argentine-made cars and manufactured goods from neighboring
Brazil and a record soybean and corn harvest last season.

September’s year-on-year factory output figure matched the
increase in August (ARECI10: ). The EMAE economic activity index
— a close proxy of gross domestic product — rose 8.5 percent
in August, according to the official figure published on Friday
by the INDEC national statistics agency. (ARECI14: )

Industrial production rose 1.2 percent in September
compared with August, according to the government’s seasonally
adjusted data.

The economy expanded by 0.3 percent in August compared with
July, INDEC said, while the trade surplus widened in September
for the first time in eight months as exports picked up.

“Industry is leading the strong economic growth this year
(and) the success of our industry is also reflected in the
exports,” Industry Minister Debora Giorgi said.

Healthy growth rates are good news for President Cristina
Fernandez ahead of next year’s presidential election even
though they force Argentina to pay out more on its GDP warrants
— securities tied to economic growth. [ID:nN01207204]

Fernandez’s husband and predecessor, former President
Nestor Kirchner, is expected to seek a second term in the
October 2011 vote and analysts expect the government to
maintain loose monetary policy despite high annual inflation
estimated at about 25 percent. [ID:nN15224685]

However, some economic analysts think both industrial
output and growth figures are overly rosy. That has deepened
doubts over data published by the INDEC, widely accused of
under estimating high inflation for more than three years.

“Even if the GDP growth data errs to the upside, the
valuation on GDP warrants is still biased lower for the much
more downward manipulation on the deflator statistics,” Siobhan
Morden, a strategist at RBS Securities, said in a report.

Year-on-year figures for both industrial output and growth
are getting a boost from the low base of comparison with the
same period in 2009. Industrial output shrank 0.2 percent in
September 2009.

“We expect the industrial sector to continue to record
solid growth in the coming months … as domestic demand among
some of the main trading partners remains strong, namely
Brazil,” said Alberto Ramos, a senior economist for Goldman
Sachs.

TRADE SURPLUS WIDENS

Strong growth has stoked consumer demand for imports this
year, but INDEC said the trade surplus (ARTBAL=ECI: ) widened
22.8 percent to $1.07 billion in September — the first time
the surplus has widened year-on-year since January and above
the $950 million surplus forecast in a Reuters poll.

The INDEC said that exports jumped 41 percent in September
versus the same month last year driven by increasing sales of
grains and oilseeds, as well as vehicles and auto parts.

Argentina is the world’s third-largest exporter of soybeans
and the top supplier of soyoil and soymeal. The country’s
soybean exports are seen getting a boost from strong demand
from China, the top importer of the oilseed. [ID:nN21106450]

Grains shipments increased by 200 percent in value in
September versus the same month last year, boosted by higher
prices and a larger harvest, where as beef exports fell 10
percent.

Imports, meanwhile, rose 46 percent in September on strong
demand for capital goods for the manufacturing sector such as
iron and steel, as well as fertilizers as farmers sow new
season corn and soybeans.

Ample trade surpluses have allowed the country’s central
bank to replenish its foreign currency (Read more about trading foreign currency. reserves, which
Fernandez has tapped this year to meet debt repayments.

“Commodity prices relevant for Argentina’s exports stand at
supportive levels … but torrid import growth will continue to
dent the trade result,” BNP Paribas analyst Florencia Vazquez
wrote in a briefing note.
(Additional reporting by Luis Andres Henao and Eduardo Garcia;
Editing by Andrew Hay)

WRAPUP 3-Surging Argentine industry output boosts growth