Argentina´s Economic Outlook 2°Q 2010

Informes Trimestrales


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Argentina´s Economic Outlook 2°Q 2010

Segundo trimestre

The external environment continues to be favorable for Argentina, thanks to the steady soybean prices and the strong growth of the Brazilian economy

The completion of the second stage of debt restructuring is a positive event that should help Argentine spreads and to achieve improvements in credit ratings


- The Government could regain limited access to the international financial markets, but it will continue to use reserves to fill the “financial gap”



- Economic growth continued to surprise on the upside and we have revised our forecast to 7% for this year



- Inflation receded in the second quarter, but we anticipate that it will regain momentum in the second half of the year, our forecast remains at 25% for the whole year



- External accounts have benefitted from the good soybean crop and smaller capital outflows thanks to the stable exchange rate, trade balance is likely to tighten as imports continue to rise and capital flows become slightly more volatile but at this stage it is not a problem



- The increase in Government expenditures this year is being financed by higher revenues, so the fiscal accounts have not deteriorated so far, but we need to watch them



- Peso interest rates remain stable as there is ample liquidity and just a small depreciation of the Peso, while the Central Bank has no intention to tighten monetary policy