MercoPress. South Atlantic News Agency

Recovery in second half of 2002

“Modestly optimistic” projections indicate the Argentine economy will experience a 3,5% contraction in 2002, according to the annual report from the United Nations Economic Agency for Latinamerica, Cepal.

"The strong negative impulse from 2001 will be partly compensated with a sound recovery during the second semester, given the idle capacity of the Argentine economy, the postponement of debt payments and the benefits of the new exchange and monetary policy", indicated Alfredo Calcagno from the Statistics office of Cepal. The report adds that during the first current half, must concentrate in the correction of relative prices to avoid the risk of falling into hyperinflation. "The recent decisions, such as the devaluation of the peso, will create tensions and could put pressure on the fiscal sector. However, a more fair distribution of the crisis costs could open the way for a recovery of home demand, helping thrust production in sectors currently highly depressed". Contrary to big banks that forecast the US dollar could reach 2,70 pesos towards the end of the year, Cepal states that there's not sufficient liquidity, "while bank deposits and assets remain frozen". The report also points out that according to the Argentine Central Bank, Argentine individuals and companies have overseas deposits equivalent to 120 billion US dollars.