June 30, 2016 / 8:17 PM / 2 years ago

UPDATE 2-Argentina industrial output shows recovery remains elusive

(Adds analyst comments, economic details)

By Joanna Zuckerman Bernstein

BUENOS AIRES, June 30 (Reuters) - Argentina’s industrial output contracted by 4.3 percent in May compared with the same month last year, the national statistics agency Indec said on Thursday, showing that the country’s much-anticipated economic recovery is still not at hand.

In the first five months of the year, Indec said industrial production slid 3.0 percent versus the year-earlier period.

Factory owners in Latin America’s No. 3 economy have been hit hard by the recession in Brazil. Despite measures by new Argentine President Mauricio Macri to bolster the economy and improve conditions for manufacturers, they are still floundering.

Since Macri became president in December, he has helped exporters by letting the currency float, reducing import limits and ditching export taxes and quotas that had been implemented by his predecessor Cristina Fernandez, who favored heavy state control of the economy.

Macri had promised the economy would rebound in the second half of 2016. But so far his fiscal measures, and the 35 percent devaluation of the local peso that came after he lifted currency controls, have increased poverty without yielding a hoped-for increase in bricks and mortar investment.

The administration estimated the annual inflation rate through May was 40 to 42 percent. The central bank said disinflation began in June.

Alberto Bernal, chief market strategist at U.S.-based XP Securities, said he expected industrial production to pick up by the end of the year.

“The reality is that Argentina entered 2016 with very heavy baggage,” he said.

“The Macri administration has been forced to correct the economic policy mistakes that the prior administration committed.” (Reporting by Joanna Zuckerman Bernstein; Editing by Hugh Bronstein and Matthew Lewis)

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