Argentina's economy posted significantly stronger economic growth in June, expanding 4% from the same month a year ago, the national statistics agency said Thursday.
June's expansion puts economic output up 1.6% in the first half of 2017 from a year earlier. The statistics agency also revised its estimate for May growth, raising it to 3.4% from 3.3%.
"Strictly speaking, we are still recovering lost ground," said Gabriel Caamaño, an economist at Consultora Ledesma, a research firm, noting that Argentina is still clawing back from a recession last year. "Towards the last quarter of this year we'll probably be able to start talking about real growth without noting that this is still really a recovery."
Argentina's Treasury minister, Nicolas Dujovne, said recently that the economy will grow 3% this year.
The economy is growing thanks to increased private and public sector investment. Farmers, benefitting from lower taxes, are pouring more money into agrochemicals and equipment while the federal government is ramping up infrastructure spending. The construction sector is also booming and a new mortgage industry is leading to higher demand for housing.
"Going forward, we expect the cyclical economic recovery to strengthen and broaden with private consumption supported by rising real wages and public investment adding a significant impulse to growth," Goldman Sachs said in a report.
An economic recovery in Brazil, Argentina's top trade partner, could also help bolster growth later this year and next, analysts said.
Mr. Caamaño, whose firm accurately predicted June's growth data, expects Argentina's economy to grow about 2.8% this year.
"As for 2018, growth will depend in part on the policies that the government pursues after the mid-term election in October," Mr. Caamaño said. "We are moderately optimistic and expect the economy to grow 3.5% annually next year."
(END) Dow Jones Newswires
August 24, 2017 16:34 ET (20:34 GMT)