Buenos Aires Times

Economy in brief: inflation, IMF, Mercosur

Six items about the Argentine economy

Saturday 14 October, 2017
Experts consulted over the likely rate of inflation in 2018 have raised their expectations to 15.8 percent.
Experts consulted over the likely rate of inflation in 2018 have raised their expectations to 15.8 percent. Foto:Cedoc.

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INFLATION 1.9% IN SEPTEMBER. Inflation hit 1.9 percent in September, the INDEC national statistics bureau announced on Thursday,  pushing the rate for the year so far to 17.6 percent, above the Central Bank’s annual target of between 12 to 17 percent. 

In Buenos Aires province, consumer prices rose by two percent, the region’s highest level since April. 

While the government has seen a string of positive economic headlines of late, these latest figures emphasise the difficulties the Mauricio Macri administration has faced when tackling inflation.

IMF RAISES GROWTH FORECAST. The International Monetary Fund (IMF) has raised its 2017 growth forecast for Argentina slightly,  predicting the economy will grow 2.5 percent.

The global body, however, raised its expectations for inflation to 22.3 percent, a rise on previous estimations but more or less in line with the  Central Bank’s most recent figure of 22 percent, which came from a poll of 54 analysts.

In a report, the IMF said it saw inflation falling to 16.7 percent in 2018.

The Central Bank recently said it saw growth this year reaching 2.8 percent.

On Wednesday, local newspaper El Cronista reported that the Argentine government had sent a mission to Washington for meetings with  representatives of the IMF and the World Bank. The travelling group, which included Central Bank chief Federico Sturzenegger, Economy  Minister Nicolás Dujovne and Finance Minister Luis Caputo, will reportedly seek to “explain” how the government intends to tackle the deficit and inflation.

LOSSES, LABOUR PROBLEMS PUSH. China’s Sinopec toward sell-off Major losses and labour problems are prompting China’s Sinopec  to consider selling off its oil and gas assets in Argentina, Reuters reported this week.

Citing “three sources familiar with the matter,” the news agency said the Chinese firm was ready to swallow a loss and was offering its options to “around a dozen potential suitors.”

The assets are mainly based in Santa Cruz province and could be worth between US$750 million to US$1 billion, a source told Reuters. That  would mean the Beijing-based firm is prepared to take a more than 50-percent loss on assests it purchased in 2010 from Occidental Petroleum Corp.

In September, Sinopec said that economic difficulties and social unrest had “weighed” on its operations in Argentina, creating problems, according to Reuters.

AEROLINEAS PULLS WEEKLY FLIGHT TO VENEZUELA. Aerolíneas Argentinas has halted its weekly flight to Caracas, blaming  “operational reasons” and security concerns.

The company informed passengers who already have tickets purchased to the Venezuelan capital would be able to change routes without any  extra costs or penalties, as long as they wish to fly to or from. 

In August, Aerolineas cancelled two weekly flights to Caracas due to “operational safety issues.”

IMPETUS WITH EU FOR ANY MERCOSUR TRADE DEAL, SAYS URUGUAY. The European Union must alter its position, if the bloc  is to reach a free-trade deal with the Mercosur, a Uruguayan official said this week. European officials have so far only offered “disappointing”  terms, Reuters reported, a situation that the unnamed official said was “frustrating.”

The next round of negotiations between the two sides is scheduled for the first week of November. Both sides said earlier this year they hoped  to reach an agreement on the long-stalled deal by the end

of the calendar year, yet there is no agreement over the amount of agricultural products and ethanol that would met with reduced import duties  when entering Europe. Experts believe the political willingness is there, with market-friendly leaders in place in both Argentina and Brazil, yet negotiators have been unable to break the deadlock.

GENERAL MOTORS AND SUPPLIERS TO INVEST US$500M. General Motors Co announced this week it would invest a total of  US$500 million in Argentine operations by 2019 as it prepares to produce a new Chevrolet model in 2020. The firm will invest US$300  million, while its supplier network will invest US$200 million at the Alvear plant in Santa Fe province.



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