UPDATE 3-Argentina's economic growth unflagging

(Adds investment figures, analyst comment, background)

BUENOS AIRES, March 15 (Reuters) - Argentina's economic growth continued at full throttle in the fourth quarter, rising 8.6 percent from the year-earlier period and 1.8 percent from the third quarter, the government reported on Thursday.

Gross domestic product also rose 8.5 percent in all of last year compared with 2005, the Economy Ministry said in a statement, confirming figures Reuters had reported earlier in the day based on a government source.

The 2006 figure was in line with the government's economic activity index, or EMAE, which also showed 8.5 percent growth for the year.

Latin America's No. 3 economy has grown by more than 8 percent in each of the last four years in a robust recovery from a 2001-02 economic crisis.

Argentine growth in 2006 was only outpaced in Latin America by Cuba and Venezuela, and it has rivaled China's tempo.

"The Argentine economy powered ahead at a strong pace in the fourth quarter despite a sharp correction on the construction front," Morgan Stanley said in a report earlier this week in which it forecast 8.6 percent quarterly growth.

"But even as the construction engine sputtered, other parts of the economy remained red hot, including private consumption, which has benefited from a solid expansion in jobs, wages, credit and relatively stable inflation."

Consumer spending, which accounts for 65 percent of GDP, grew 7.7 percent in 2006, while gross fixed investment jumped 18.7 percent -- below the 22.7 percent rise recorded in 2005.

Overall investment, however, represented 21.7 percent of GDP last year, reaching its maximum level since 1993.

The center-left government of President Nestor Kirchner has used an expansive monetary policy and higher wages to help stimulate economic growth, despite some analysts' suggestions that growth be cooled to help curb inflation.

The government also spends heavily on public works, particularly in the investment-thirsty energy sector.

In the fourth quarter, private consumption rose 7.5 percent compared with the year-earlier period and investment grew by 14 percent -- its lowest rate since the first quarter of 2005.

Economia & Regiones, a consultancy, said this year "growth will be driven more by consumer spending than investment, since the government will continue with its active fiscal policy of stimulating consumption and aggregate demand."

A February central bank survey of economists, traders and analysts forecast 2007 growth at a median of 7.8 percent BCRA31, in what would be an unprecedented five-year streak. (Additional reporting by Cesar Illiano and Hilary Burke)