MercoPress. South Atlantic News Agency

Optimistic outlook for Argentina next year

The Argentine economy is accelerating and not decelerating said JP Morgan's vice president for emerging markets Vladimir Werning addressing an annual meeting of the Council of Americas on Argentina's prospects for next year.

The risk assessment agency forecasts sustained economic growth, high profit rates, recovery of real income and a drop in the foreign debt equation.

"The high level of growth is helping to cut the debt/GDP relation to an annual rate below 6%", said Werning before over 70 investors, bankers and analysts.

Werning who was categorically optimistic discarded any negative effect for the Argentine economy in spite of the fact 2007 is an electoral year.

"The impact of election in budget spending can be contained mainly because of a weak opposition, a conservative budget and flexible spending", said JP Morgan's executive.

Several factors are contributing to the strong recovery and sustainability of the Argentine economy.

"Some micro distortions can be expected, like price controls or export restrictions, but unless they intensify earnings will continue to be the main engine behind investment and will help to relieve the strong demand", he said.

"In any case the economy is accelerating and not decelerating", he emphasized adding that the economy will continue to expand in 2007 with inflation in the range of 10%.

"Political influence on inflation in a context of political campaigning will be minimized because of the gradual but sustained recovery of real income".

With inflationary expectations contained and a reduction in debt Werning believes "the 2007 budget has under estimated revenue, it's a most conservative estimate".

Argentina has over ensured itself against outside risks so monitoring should be focused in the domestic front and the possibility of an overheating of the economy because of the strong growth rates, highlights Werning.