Argentine economy grew 7.7pc in September

BUENOS AIRES, Nov 19 (Reuters): Argentina's economy grew 7.7 per cent in September from a year earlier, beating market expectations and marking the 25th straight month of growth. The EMAE economic activity index, published by the government Friday, which measures most of the components of gross domestic product (GDP), inched up 0.3 per cent in September from August. It jumped 9.0 per cent in the 12 months through September versus the same period a year before, the INDEC national statistics agency said. Latin America's No 3 economy is expanding at one of the region's fastest rates thanks to lucrative grains exports, robust consumer spending and industrial output led by car sales to the country's top trade partner, Brazil. The government expects the boom to continue but at a more moderate pace. Next year's government budget bill forecasts 8.3 per cent growth this year and a 5.1-per cent expansion in 2012. But some economists say in coming months, Argentina's galloping growth could be reined in even more sharply by capital flight, softer demand from Brazil, and a deteriorating global economy. "There's a slowdown that is more evident in September and that will be seen in coming months and it is the result of capital flight," said Mario Sotuyo, an analyst for Economia & Regiones consulting firm. "It has deepened in recent months and it is hitting economic growth head on," Sotuyo added. September's pace of growth was estimated at 7.5 per cent year-on-year, according to the median forecast in a poll. In a data revision, INDEC said August's EMAE rose 0.7 per cent versus July, compared with the 0.6 per cent increase reported previously. Opposition politicians and private analysts say the country's prospects are too reliant on world grains prices and Brazil's economic outlook, and they are on the lookout for signs of a slowdown. Economic growth could face further strain due to a series of new aggressive government measures to stem capital flight, which analysts say could backfire, encouraging more capital outflows by nervous investors and savers. Increased state spending and high global commodities prices have helped encourage growth in Argentina, one of the world's top grains exporters. Loose monetary policy is also buoying growth but at the cost of stoking inflation, which private economists estimate at roughly 25 per cent, one of the region's fastest rates.