7/31/2019 Extra Assignment GDA02 Argentina

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TEAM GDA02A01302588 Erick Rodrguez Nieto

A01307124 Eduardo Barocio AcostaA01307744 Fernando Carrillo Alejo

Argentina

Review the following statistical releases and data

Read the last news release by the Central Bank of selected country on inflation.

In Republic of Argentinas Central Bank Inflation Report for the Third Trimester of 2010Government states that different Price indexes reflect a moderated Inflation increase in secondtrimester compared with the previous months of 2010. These, because of less pressure in food andbeverages prices at an international and local level and to the low seasonality of the period.

Since the fourth month of the year price increase of meat slowed down according to theinternational markets. So by the second trimester the pressure that had lead to a higher rhythm ofprice increase in the firsts months of the year disappeared, as well as some seasonality factorsthat contribute to hold prices evolution as in vegetables, clothing and tourism. Thus, retail pricesdecelerated its monthly increase vs. the first months of 2010, given mainly by food.

During the second trimester, wholesalers prices also showed a conservative behavior,reflecting mainly lower increases in primary products, according to international prices evolution ofagricultural raw materials in international markets. In 2010, Industrial and Manufacturing activitieshave represented the main reason of certain recovery of Argentinas economy, even when

manufacturing prices have presented a constant increase. Wholesalers prices have beenrecovering according to the international economy.

In one hand, for the next months of the year, Argentinas Central Bank anticipates thatpressure on food and beverages will be moderate and agricultural products will maintain a similarprice level but with some volatility. On the other hand, they expect an increase in services becauseof seasonality of last trimester in some parts of the sector.

Different indexes show that Argentinas economy is recovering, and none the first nor thesecond trimesters should be extrapolated in order to anticipate annual inflation report. It means

that 8 or 9 percent of inflation showed in Argentinas economy in the first half of the year, doesntmean that it will ends at 16 or 18 percent. Government expects Inflation ends at maybe 15%instead of the 20 or even 30% of inflation expected for the analysts at the beginning of 2010.

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Read the country report of your country published by the Economic Commission forLatin America and the Caribbean. Available at http://www.eclac.orgPreliminary Overview of the Economies of Latin America and the Caribbean

Following six years of robust growth, the Argentine economy experienced a sharp slowdown in

2009, and the growth rate for the year as a whole is expected to stand at 0.7%.The central banksforeign-currency transactions resulted in a slight variation in international reserves, and theexchange rate against the dollar increased by approximately 10% between the end of 2008 andmid-November 2009.

The fall in tax collections, together with the substantial increase in government spending, loweredthe national public sector primary surplus, while some provincial governments experiencedfinancing constraints. Both official and private statistics attest to a reduction in the rate of inflation,which had a positive impact on poverty and indigence rates, although discrepancies in the differentmeasurements of price levels and other variables cast doubts as to the extent of the actualimprovement in these social indicators.

Industrial activity actually picked up, thanks in part to the robust growth of the Brazilian economy.Favorable weather conditions suggested that crop volumes, in particular soya output, wouldrebound. The national government primary surplus is estimated to have shrunk by 1.5 percentagepoints to 1.4% of GDP.

Reported data on the variations in real GDP show dissimilar trends between the goods-producingsectors and the services sector, In the case of the former, the slide in agricultural output led thedownturn. The grain harvest dropped from over 90 million tons to just over 60 million in 2008-2009,the lowest level in the decade. The drop in industrial activity was due mainly to a downturn in thecapital goods and consumer durables sectors. Automobile production fell by approximately 20%year-on-year in the first ten months of 2009, although it remained at historically high levels.

In October, the consumer price index (CPI) of Greater Buenos Aires was reported to show a 6.5%year-on-year increase, while the general wage index rose by 16% over the 12 months up toSeptember. The demand for labor mirrored the slowdown in economic activity. Data for the thirdquarter revealed a slight decrease in year-on-year employment figures, with the jobless rate at9.1%

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Read the last news release on Industrial Production and Gross Fixed Investmentpublished by the statistical agencies of selected country.

Industrial ProductionMonthly %variation without seasonal adjustment

Industrial Monthly Estimate (EMI) (Estimador Mensual Industrial) -September 2010.In agreement with data of the Industrial Monthly Estimator (EMI), the industrial activity ofSeptember of 2010 shows increases of 10.1% in the seasonality measurement and of 9.7% interms of without seasonal adjustment with respect to September of 2009.

In September of 2010, in relation to last August, the manufacturing production registers increasesof 3.2% in the seasonality measurement and of the 1.2% in without seasonal adjustment terms.The industrial activity of the first nine months of 2010 with respect to the same period of the

previous year presents/displays growth of 9.5% in without seasonal adjustment terms and 9.4% inthe seasonality measurement.

The industrial activity of the third quarter of 2010 in relation to the second quarter of 2010 registersan increase of 0.9% in without seasonal adjustment terms. In relation to the behavior of thetendency-cycle index, an increase of 0.3% with respect to the month of past August is observed inSeptember of 2010.

Table 1. Data to September 2010

MonthlyInformation

Ninemonths

2010 / 2009

Sep 2010 /Sep 2009

Sep 2010 /Aug 2010

Percentage variationWithout seasonal adjustment 9,5 9,7 1,2Seasonally adjusted 9,4 10,1 3,2

Table 2. Three month (Quarterly) data

Seasonally adjustedPercentage

variation3 Quar 2010 / 3 Quar 2009 9,32 Quar 2010 / 2 Quar 2009 10,11 Quar 2010 / 1 Quar 2009 9,04 Quar 2009 / 4 Quar 2008 5,43 Quar 2009 / 3 Quar 2008 -1,4

(*) The quarterly data Without seasonal adjustment EMI were obtained from

the quarterly average of the Without seasonal adjustment monthly series.

Gross Fixed Investment

Industrial production growth rate:-1.2% (2009 est.)country comparison to the world: 80

Without seasonaladjustment (*)

Percentagevariation

3 Quar 2010 / 2 Quar 2010 0,92 Quar 2010 / 1 Quar 2010 2,81 Quar 2010 / 4 Quar 2009 -0,44 Quar 2009 / 3 Quar 2009 5,73 Quar 2009 / 2 Quar 2009 1,7

https://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?countryName=Argentina&countryCode=ar&regionCode=sa#2089https://www.cia.gov/library/publications/the-world-factbook/rankorder/2089rank.html?countryName=Argentina&countryCode=ar&regionCode=sa&rank=80#arhttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?countryName=Argentina&countryCode=ar&regionCode=sa#2089https://www.cia.gov/library/publications/the-world-factbook/rankorder/2089rank.html?countryName=Argentina&countryCode=ar&regionCode=sa&rank=80#ar

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Argentinas investment climate deteriorated in 2009 amid waning market confidence, growingpolicy uncertainty and escalating state intervention in the economy. An unpredictable policyframework and weak institutions, in addition to macroeconomic instability, have suppressed

investor interest. The domestic economy is increasingly subject to trade protectionism and thecontinuing use of price and foreign-exchange controls, in an attempt to control the distortionsarising from expansionary fiscal and monetary policies.

Lower international financial flows and a weakened domestic business environment put a damperon inflows of foreign direct investment (FDI) to Argentina in 2009. Gross FDI inflows to Argentinaplummeted to US$4bn in 2009, according to the National Statistics and Census Institute (InstitutoNacional de Estadstica y CensosINDEC), from US$9.7bn in 2008, which was the highestamount of FDI inflows recorded since 2000.

Inflows of FDI to Argentina in 2009 accounted for 6.9% of the total entering Latin America,

according to the United Nations Economic Commission for Latin America and the Caribbean(ECLAC). The countries in the region that received more FDI in 2009 were Brazil (US$25.9bn,36.6% of total inflows), Chile (US$12.7bn, 17.9%), Mexico (US$11.4bn, 16.1%) and Colombia(US$7.2bn, 10.2%).

According to the latest available disaggregated figures from the central bank (Banco Central de laRepblica ArgentinaBCRA), the manufacturing sector attracted investment in 2008 thatamounted to US$5.17bn (or 53.3% of total inflows of US$9.7bn); followed by financial services(US$1.14bn, or 11.8%); infrastructure (US$891m, or 9.2%); trade and services (US$819m, or8.4%); agriculture (US$637m, or 6.6%); and mining (US$544m, or 5.6%).

Following the crisis earlier this decade, aggregate investment in Argentina rose sharply, helping to

spur the vigorous recovery in economic growth since 2002. The investment environment changedsignificantly as the economy recovered, notably through significant real exchange ratedepreciation, negative real interest rates and increased international demand for argentineproducts. Financial conditions were affected by sovereign default and banking crisis.

Investment (gross fixed):

20.9% of GDP (2009 est.)country comparison to the world: 78

https://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?countryName=Argentina&countryCode=ar&regionCode=sa#2185https://www.cia.gov/library/publications/the-world-factbook/rankorder/2185rank.html?countryName=Argentina&countryCode=ar&regionCode=sa&rank=78#arhttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?countryName=Argentina&countryCode=ar&regionCode=sa#2185https://www.cia.gov/library/publications/the-world-factbook/rankorder/2185rank.html?countryName=Argentina&countryCode=ar&regionCode=sa&rank=78#ar

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Foreign direct investment, net inflows (BoP, current US$)2005 2006 2007 2008 2009

Argentina 5,265,250,000 5,537,340,000 6,473,150,000 9,725,553,130 4,009,395,675

Sources:http://www.bcra.gov.ar

http://www.eclac.org/

https://www.cia.gov/library/publications/the-world-factbook/geos/ar.html

http://www.indec.gov.ar/

http://portal.eiu.com.

http://data.worldbank.org/

http://www.imfstatistics.org (IMF Working Paper - Investment by Large Firms in Argentina)

http://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD?order=wbapi_data_value_2005+wbapi_data_value+wbapi_data_value-first&sort=aschttp://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD?order=wbapi_data_value_2006+wbapi_data_value&sort=aschttp://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD?order=wbapi_data_value_2007+wbapi_data_value&sort=aschttp://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD?order=wbapi_data_value_2008+wbapi_data_value&sort=aschttp://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD?order=wbapi_data_value_2009+wbapi_data_value+wbapi_data_value-last&sort=aschttp://data.worldbank.org/country/argentinahttp://data.worldbank.org/country/argentinahttp://www.bcra.gov.ar/http://www.eclac.org/https://www.cia.gov/library/publications/the-world-factbook/geos/ar.htmlhttp://www.indec.gov.ar/http://portal.eiu.com.ezproxy.t-bird.edu/index.asp?layout=displayIssueArticle&issue_id=1907344975&article_id=107344995http://data.worldbank.org/http://www.imfstatistics.org/http://www.imfstatistics.org/http://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD?order=wbapi_data_value_2005+wbapi_data_value+wbapi_data_value-first&sort=aschttp://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD?order=wbapi_data_value_2006+wbapi_data_value&sort=aschttp://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD?order=wbapi_data_value_2007+wbapi_data_value&sort=aschttp://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD?order=wbapi_data_value_2008+wbapi_data_value&sort=aschttp://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD?order=wbapi_data_value_2009+wbapi_data_value+wbapi_data_value-last&sort=aschttp://data.worldbank.org/country/argentinahttp://www.bcra.gov.ar/http://www.eclac.org/https://www.cia.gov/library/publications/the-world-factbook/geos/ar.htmlhttp://www.indec.gov.ar/http://portal.eiu.com.ezproxy.t-bird.edu/index.asp?layout=displayIssueArticle&issue_id=1907344975&article_id=107344995http://data.worldbank.org/http://www.imfstatistics.org/