BUENOS AIRES (Reuters) – Argentina’s industrial production <ARIO=ECI> turned positive in May, official data showed on Thursday, breaking a 15-month streak of declines and providing a glimmer of hope for the lackluster economy four months before crucial midterm elections.
The 2.7 percent increase in output versus May 2016 was below median expectations in a Reuters poll of analysts for a 3.5 percent increase. The positive reading was nonetheless welcome in a country hit by high inflation that has reduced domestic consumption and weakness in main trade partner Brazil.
Industrial activity has fallen a cumulative 1.4 percent so far this year compared with the first five months of 2016, after a 4.6 percent decline overall last year.
The turnaround, if sustained, could provide a boost to President Mauricio Macri’s efforts to spur growth, seen at around 3 percent in 2017 by the government. Overall economic activity fell 2.2 percent last year but has grown 0.4 percent in the first four months of the year.
Macri has been hard put to deliver on promises of attracting investment needed to get the economy moving ahead of the October mid-term vote, which will determine the power he will have in Congress to push through market-friendly reforms in the second half of his term.
The rebound in industrial production in May was driven by a 17.4 percent year-over-year increase in the automotive sector and a 3.9 percent increase in food production. Output of steel and cement – crucial inputs for a fast-growing construction sector – also posted strong growth.
Struggling industries such as textiles and tobacco continued to decline, falling 13.3 and 15.2 percent, respectively.
May’s official economic activity figures have not yet been released. The economy expanded by 0.6 percent in April, below expectations.
(Reporting by Buenos Aires newsroom, writing by Luc Cohen, editing by G Crosse and Chizu Nomiyama)