Argentina's Economic Outlook 3°Q 2010

Informes Trimestrales


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Argentina's Economic Outlook 3°Q 2010

Tercer trimestre

Nestor Kirchner's death opens a wide range of questions regarding the political outlook, besides next year there are presidential elections in October

- Argentine spreads fell in the last weeks, favored by the improvement in financial conditions for emerging economies and hopes about changes in the political outlook, however they remain relatively high.


- Government may issue debt and regain access to the financial markets in the next months, but it will continue to use reserves as the main instrument to fulfill the “financial gap”.



- Economic growth continued surprising on the upside, we expect a 7.5% GDP growth this year.



- Inflation receded in the second and third quarter, but will regain momentum in the fourth quarter, our forecast remains at 25% for the year end.



- 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 the higher revenues generated by the economic recovery, while there will be a small fiscal surplus this year, we need to continue watching the fiscal accounts, since expenditures are in high levels.



- 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