MercoPress. South Atlantic News Agency

Private sector anticipates strong performance of Argentine economy in 2010/11

Argentine imports in first half of 2010 soared 43% over 2009

Argentina’s Finance Executive's Institute (IAEF) indicates Argentina could grow 6.5% in 2010 and 4.5% in 2011 according to its August report released this week.

Likewise, the report announces that in the first half on 2010 imports grew 43% over 2009, reducing the current account surplus in the Balance of Payments (from 6.2 to 2.9 billion dollar), despite a 18% increase in exports. Also, and despite this jump, the report remarks that ”the GDP of 2010 will be 3.5% higher than 2008, with a level of imports 6.8% lower measured in volume. This indicates a profile of less intensive domestic spending on imports, which is consistent with more consumption (biased toward domestic goods), more public expenditure and less investment, in relative terms. Some substitutions in supply and regulatory issues complete the picture.“

The reports points out that ”the increase in revenue in the second quarter, which resulted in a 37.8% increase of “normal” resources of the public sector and a slowdown in capital spending, allowed an improvement of the corrected financial results minus extraordinary incomes in that period (-2.5 billion pesos), both versus the first quarter (-5.1billion pesos) as in the second quarter of 2009 (-6.7 billion pesos)”.

The report also wonders if the world economy will resume its long-term growth rate (3.5% per year according to purchasing power parity, and 2.7% according to GDP at market prices) or fall into a W-shape curve. To answer this, the IAEF explains that “the question confronts optimistic and pessimistic positions. The first are based on four factors: economies of scale that generate growth, the historical trend for less developed countries to converge the capita GDP of the most developed ones, the effect of globalization on trade growth and the increase of savings in the world. In turn, the pessimists emphasize the destruction of wealth that produced the crisis and the fiscal picture.”

According to the IAEF, the optimistic hypothesis are possible thanks to the ”re-valued dollar against the Euro and its depreciation against the Yuan; the very low nominal and real interest rates; a trade growth higher than global GDP; and the commodity prices in levels above those early in the decade. In this scenario and assuming favourable domestic conditions and prudent macroeconomic policies, Argentina could grow in both 2010 and 2011”.

IAEF is the Argentine branch of the the International Association of Financial Executives Institutes (IAFEI), a private non-profit and non-political association. The Association is organized under the provisions of Articles 60-79 of the Swiss Civil Code and, accordingly, has its own legal personality. Founded in 1969, IAFEI now has 17 Member Institutes, with a total membership of roundabout 15.000 financial executives.

IAFEI, as a powerful force in the financial community, is recognized and respected in accounting, financial and governmental circles around the world.