MercoPress. South Atlantic News Agency

Argentina's business leaders optimistic about the economy

Argentina's most influential businessmen anticipate a stable to optimistic economic scenario for the next semester according to an opinion poll among 173 corporate CEO, a most unusual forecast in a country historically unstable when governments change.

The issues which most concern business leaders are growing inflation and the urgent need of infrastructure investments, particularly energy related. The poll showed 61% of interviews expect the current economic situation to remain stable in the coming six months; 20% predict a modest performance increase and 17% a moderate performance decrease. Argentina's elected president Cristina Fernandez de Kirchner takes office next December 10 and she's expected to continue with the economic expansion model implemented by her husband, President Nestor Kirchner which enabled the country to grow at an average 8% since 2003. Eduardo D'Alessio from consultants D'Alessio IROL who was responsible for the report made most interviews following the October 28 presidential election, and said that "it's unusual having a change of government in the middle that it should not generate any concern over economic instability". The poll marked the sixth consecutive semester of "economic predictability" according to the majority of businessmen belonging to the IDEA organization, which concentrates most of the country's leading corporations. For the next twelve months a majority of business leaders expect profits, exports, investment, sales and employment to remain stable or experience a slight increase, with domestic demand as the main engine of the economy. The main obstacle is inflation, a growing problem for Argentina, with a reading of 8.4% in the last twelve months which generated into a political scandal when the government changed calculating methods and equations to favor its announced targets. In the long term all business leaders coincided that Argentina needs a strong injection of government intensive spending in energy, both for electricity generation and expanding oil and gas reserves, plus highways, railways, telecommunications and ports. Argentina has been undergoing a serious energy shortage because of lack of supply parallel to sustained economic growth. Other challenges that could pose a threat in the short term to business optimism are the increase in government spending, the need for investments and a greater opening of the Argentine economy. But Argentine farmers don't feel the same way following this week's average five percentage points increase on cereals and oil exports taxes which means they now stand in the range of 28% (wheat) to 37.5% (soybeans). In a harsh release the Confederation of Rural Associations from Buenos Aires and La Pampa claim that in the last twelve months government spending has ballooned 40% while revenue only 15%. "This causes inflation, a widening budget deficit and it's not cutting farm profits and banning open markets that higher crops and yields will be achieved". The Confederation further argues that of each 100 pesos of farm sales, 55 go to government through taxes, levies and other costs.