MercoPress. South Atlantic News Agency

Argentine economy moving into an “agro-cooling” period

The Argentine economy will be exposed to an “agro-cooling” period, according to market analysts quoted by the Buenos Aires press. This neologism in practical terms translates into a significant slowing down of the economy as a consequence of the current stand off between farmers and the President Cristina Fernandez de Kirchner administration.

"We already had symptoms of a slowing down of economic activity at the beginning of the year but the conflict with farmers confirmed and deepened the tendency", said Ricardo Delgado from the Ecolatina think tank. Among the signals that Delgado points out to support his statement he includes: real salaries are eroding because of the increasing inflation, which according to Ecolatina and following a similar procedure as the government's Statistics Office, Indec, before it was intervened, now stands in the range of 25 to 27% annually, with growing consumer expectation. Consequently spending in supermarkets and shopping malls has been growing in volume at half the rate of 2007. Energy consumption has also moderated: from the second half of 2007, demand for electricity has slowed down considerably and this cannot be explained only by climate conditions. However Bernardo Kosacoff from the UN regional economic office, Cepal in Argentina, points out that some manufacturing industries advanced production in the first half of the year fearing a shortage of energy. But in some sectors such as construction, activity remains strong in those buildings waiting to be finished but the number of building permits requested has dropped significantly. "Inflation which climbs as a consequence of a very strong expansion unfortunately does not ease symmetrically. Expectations and the push for prices make the big difference", underlined Fernando Navajas from FIEL, another economy think tank with a long reputation in Argentina of good forecasts.