(Recasts with private economist comments, other data)
By Sarah Marsh
BUENOS AIRES, May 26 (Reuters) - Argentina said economic activity grew a stronger-than-expected 2.0 percent in March, which private economists put down to a pickup in consumption and a bumper soy harvest, although they cautioned the data may be overly optimistic.
Analysts polled by Reuters had expected a 0.8 percent rise in the monthly EMAE economic activity index, which is a close proxy for gross domestic product, in part due to a weak performance in the same month last year.
Official data, especially for inflation that is running in double digits, has lost much credibility since President Cristina Fernandez took office in 2007.
The government does not publish a breakdown of its economic activity index or any explanation. Analysts say it is likely skewed because it uses official inflation data.
Still, strategist Alejo Costa at local investment bank Puente said early economic indicators for sectors like construction and retail suggested there was a slight uptick in Latin America’s third largest economy.
Supermarket sales were up 7.2 percent on the month in March after falling in the previous two months, while the construction sector grew 1.6 percent in seasonally adjusted terms.
“The economy seems to be picking up slightly but we don’t believe this will be enough for it to have sizeable growth this year,” said Costa. “It’s hard to know what is behind this figure.”
Puente forecasts Argentina’s economy will contract 0.4 percent this year, returning to growth in 2016 with a 2.6 percent expansion on the back of government policy changes following presidential elections in October. Fernandez is constitutionally barred from a third consecutive term.
Fausto Spotorno, an economist at local consultancy Orlando Ferreres and Associates said a record soybean crop likely also boosted economic activity figures in the grains powerhouse.
Still, his consultancy estimated economic activity shrank 1 percent in March and forecasts a 1.6 percent contraction for the year.
Separately, official data on Tuesday showed Argentina’s industrial output contracting 1.5 percent in the twelve months to April, marking the 21st consecutive monthly decline on the previous year.
The figure was better than the median forecast in a Reuters poll of six analysts for a 1.9 percent fall.
A steep economic downturn in key trading partner Brazil has hurt demand for Argentine automobiles while import restrictions introduced to protect Argentina’s low foreign reserves are also hurting manufacturers reliant on parts from abroad. (Editing by Lisa Shumaker and Andrew Hay)