n° 71 - march 2021 economic gps - pwc
TRANSCRIPT
N° 71 - March 2021
Economic GPS
Tracking
Reasons for foreign exchange gap fluctuations 4
Industry Roadmap
2021 Salary expectations - What to expect in this new context?8
Customs & FX
Same problem, same solution9
Federal Landscape
Province: Río Negro10
The cost of a de facto exchange rate split
In past months, the monetary authority has managed to reduce and keep the exchange gap stable, although the measures deployed are by no means harmless. As detailed throughout the Tracking, the key tool for such control has been intervention in both alternative exchange (e.g. Electronic Payment Market, blue-chip swaps, etc.) and future markets.
In any market, if a broker wishes to set the equilibrium price, he or she must be able to “clear” the market, that is, to absorb all the surplus demand or supply. In a de facto split in the exchange market, the BCRA José María Segura
Chief Economist PwC Argentina
Editorial
As a consequence, if not willing to correct the trading values of the financial dollar, the BCRA may increase exchange restrictions as well as interest rates or accelerate sterilization by selling (and not repurchasing) bonds. In all cases, there will be an impact on the level of activity due to quantitative restrictions or higher financial costs.
However, the higher cost is not so evident, even when it goes deeper. The disruptions that these measures cause in the economy have a deep impact on investment, which is the only activity that allows for the generation of the dollar supply that the economy needs.
has aimed at fixing the price in both. Considering the financing needs of the public sector, the demand for US dollars is steadily on the rise -even sterilizing pesos at the unofficial price and injecting them for the purchase of official dollars-, the cost that the monetary authority has been paying for keeping the price at bay in both markets is the non-increase in their reserves -or at least not to the extent of the trade surplus gained through restrictions- and the increase in country risk (that is, the fall in the price of treasury bonds or, in other words, the increase in their yields).
Again, the possibility of carrying out this strategy has been associated with the surplus of the trade account where, despite high commodity prices and some containment in imports due to a still weak activity, it was necessary to extend the prevailing restrictions (situation accounted for in our Custom & FX article).
Although in the coming months of the year the supply of dollars is seasonally high, the need for dollars is also expected to increase. Recent measures aimed at increasing the available income of large sectors of the population -although the financing mechanism is not clear- could not only imply higher issuance, with its subsequent impact on inflation and the demand for dollars, but due to their effect on consumption and on the level of activity, measures will have an impact on import needs.
Debt maturities with the Paris Club and multilateral organizations fall due as from May. Although it is partially possible to meet this demand with the Argentine share of the issuance of Special Drawing Rights, which is under the assessment of the International Monetary Fund, there is no guarantee that both flows match, not even temporarily.
Tracking
Reasons for foreign exchange gap fluctuations
During 2020, the gap between the official exchange rate and the different rates of exchange alternative to it widened, as the latter almost doubled the BCRA quotations in October 2020. The gap has narrowed and stabilized since then, although the means used for that purpose pose new risks.
Customs & FX
Same problem, same solution
Why the Central Bank of Argentina (BCRA) has extended the effective period of many exchange regulations that were set to expire on March 31, 2021, and how much longer these will be in place? The rules serve their purpose (considering that little is expected from them), and they will be in force for some time (as long as they are bearable).
Industry Roadmap
2021 Salary expectations - What to expect in this new context?
In this first quarter of 2021, and a little over a year since the commencement of the social, preventive and mandatory isolation (ASPO), we still suffer from the effects of 2020 which, to a greater or lesser extent, affected us all. Besides, locally, we continue going through an economic context with high inflation, devaluation, country risk and loss of purchasing power. In this scenario, salaries keep losing this battle, as in prior years, and the wage gap continues to grow.
Federal Landscape
Province: Río Negro
Río Negro is located in the northern part of the Patagonia region, with an area of 203,013 square kilometers, the province is the 15th most populated province in Argentina. Its economy is based on primary activities such as fruit growing, horticulture, beekeeping, livestock, fishing and mining. In addition, three large hydroelectric dams on the Limay River supply energy to much of the country.
04 0908 10
ContentsMacro monitors 14
Table of indicators 15
Our Services. Contacts 16
Tracking
During 2020, the gap between the official exchange rate and the different rates of exchange alternative to it widened, as the latter almost doubled the BCRA quotations in October 2020. The gap has narrowed and stabilized since then, although the means used for that purpose pose new risks.
The year 2020 started with an average foreign exchange gap of 36% in January. The shock of the COVID-19 outbreak, the social isolation measures imposed in April and May, the pertinent economic policies tending to mitigate their impact and the issuance of currency
Reasons for foreign exchange gap fluctuations
4
as a method for their financing, all widened the gap between the alternative exchange rates and the official exchange rate, reaching a 66% average during those months. This occurred despite the fact that a rise, over a given period of time, in peso holdings partly attributable to precautionary reasons; the low level of economic activity and the freeze on prices imposed by the Emergency Law enacted in December 2019 or on public utility rates imposed by presidential decrees, showed a significant downward trend in the velocity of money (which reduces pressure on demand for dollars) and curbed inflation.
5
GRAPHIC 1
Foreign exchange gap in terms of percentage and international reserves in the BCRA
Source: Prepared by the authors based on Central Bank of Argentina and Reuters statistics
After the initial rise, the foreign exchange gap stabilized at high levels but with less volatility, while Argentina was making progress in reaching an agreement with creditors of foreign debt.
However, the drain on BCRA reserves has never stopped and led the monetary authority to impose new restrictions on access to the official foreign exchange market on September 15, 2020. A rate of inflation that started to rise with the gradual reopening of the economy, from below 2% per month on average, and the reduction in the interest rate set by the BCRA in October, significantly increased demand for dollars, with a direct impact on the foreign exchange gap which exceeded 100% in mid-October.
In this widening gap context -impossible to maintain for long periods- there were two scenarios: the official exchange rate was depreciated at a faster pace, with the consequent further devaluation of the peso, or both the monetary authority and the treasury were forced to intervene jointly to lower the alternative exchange rates -the chosen method-.
The Ministry of Economy implemented two transactions in an attempt to relieve pressure on alternative foreign exchange markets: i) a bid for dollar-linked bonds for a total of USD 3,427 million, and ii) a swap for dollar-denominated bonds was offered to foreign holders of peso-denominated bonds, which exerted pressure on those markets when they sold their positions in local currency. At the same time, the BCRA backtracked on its promise to reduce the interest rate it had set in October. The monetary policy rate increased from a 36% floor to 38% between October and February/March. In
turn, the BCRA, together with other government agencies, started to purchase and sell dollar-denominated securities in ARS and USD in the dollar MEP and BCS (blue chip swap) markets, also increasing its intervention in the forward market.
A key element to take into account is the fluctuation in the expected implicit rate in US dollars arising from considering the forward exchange rate positions and the interest rate in pesos. This variable started to recover in November until it reached positive values in March. Thus, the incentive increased for holders of peso-
denominated assets to maintain their positions in that currency and expect to convert them into dollars (and this reduces gap pressure).
With its positions in the forward rate market, the BCRA has the power to influence this expected implicit rate in dollars, by making contracts with levels of devaluation below expectations. This enables the BCRA to sterilize pesos in the market, since it wins the contracts in disregard of devaluation.
A combination of all these actions reduced the gap to the current levels (approximately 65%). The question now is: How much longer will we continue using these tools? There are no definite answers to this type of question, but it is possible to explore the limits.
First, the BCRA repurchases bonds using its reserves and although the stocks of reserves have increased due to the balance of trade, which is largely explained by the restrictions on access to the official foreign exchange market, such stocks limit the power to intervene this market. In the year 20211 to date, the BCRA has been able to purchase foreign currency for USD 2.043 million, but it has lost approximately USD 932 million as a result of its bond market intervention. Another associated cost of these operations is a higher country risk premium.
1 YTD at March 19, 2021
34,000 36,000 38,000 40,000 42,000 44,000 46,000 48,000
0%20%40%60%80%
100%120%140%
Gap Reserves, mn USD (right axis)
As shown by Graphic 2, bond holdings by the BCRA decreased steadily, where stocks of reserves place a limit on the repurchase in dollars of bonds sold in pesos. Although this is conducive to sterilization, the net effect is that a plentiful supply of bonds causes a fall in their prices and increases their yield.
Although the public sector’s needs to access the capital market are limited (because the issuance of debt is an alternative to deficit financing), the effect on the private sector is not minimal, since it has to pay very high rates to obtain financing, with fewer possibilities of increasing investment.
Furthermore, the velocity of money no longer shows a downward trend; rather, it has started to increase. This means that, if the demand for money does not increase (the expected economic recovery will hardly compensate for the effect), a rise in prices could be expected. Inflation has risen and is now at around 3%. With the public sector’s financing needs satisfied with the issuance of debt and a limited capacity to absorb such issuance with the expected economic growth, there is a risk that the pesos issued are applied to meet the demand for dollars. In this regard, it is important to highlight that deposits in pesos in real terms have stabilized.
Historically, the exchange rate has been the anchor of inflationary pressures. Nowadays, with the de facto splitting of the foreign exchange market, the monetary policy aims to control the foreign currency prices in the two markets. As of now, it has demonstrated to have the tools to do so. In the second quarter of the year, the money supply in US dollars
GRAPHIC 2
Bonds held by the BCRA (in millions of USD)
Source: Prepared by the authors based on BCRA official statistics.
TABLE 1
Factors that explain the variations in international reserves (in millions of USD)
Source: Prepared by the authors based on Central Bank of Argentina official statistics.
International Reserves
Factors that explain the variations in International Reserves
Purchase of foreign currency
International Organizations
Other Public Sector
Transactions
Minimum cash
Other (including reverse
repos in USD abroad)
2020 -5462 -4169 -2547 633 1974 -1353
Total 2021 (at March 19)
341 2043 -629 -465 324 -932
arising from exports is seasonally high; therefore, it is possible to foresee that the degrees of freedom of the monetary and exchange rate policy will continue. Some of the circumstances that made it possible for the foreign exchange gap to remain stable have begun to change, and imbalances will continue to accumulate in the future.
6
7,000
7,500
8,000
8,500
9,000
9,500
10,000
10,500
Date of the debt swap
GRAPHIC 3
Country Risk, base: September 10, 2020=1 (at the swap date)
Source: Prepared by the authors based on financial information sources.
GRAPHIC 4
Velocity of money
Source: Prepared by the authors based on BCRA and INDEC official statistics.
GRAPHIC 5
Private Sector deposits in real terms, in pesos December 2002 (in millions of pesos)
Source: Prepared by the authors based on BCRA and INDEC official statistics.
GRAPHIC 6
Implicit rate in US dollars and foreign exchange gap
Source: Prepared by the authors based on BCRA and Rofex official statistics.
7
0.9
0.95
1
1.05
1.1
1.15
1.2
1.25
1.3
1.35
1.4
2020-09-10 2020-10-10 2020-11-10 2020-12-10 2021-01-10
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
60,000
65,000
70,000
75,000
80,000
85,000
90,000
95,000
100,000
-40%-30%-20%-10%0%10%20%30%
0%20%40%60%80%
100%120%140%
Foreign exchange gap
Implicit rate in US dollars (8 months) (right axis)
Industry Roadmap
In this first quarter of 2021, and a little over a year since the commencement of the social, preventive and mandatory isolation (ASPO), we still suffer from the effects of 2020 which, to a greater or lesser extent, affected us all. Besides, locally, we continue going through an economic context with high inflation, devaluation, country risk and loss of purchasing power. In this scenario, salaries keep losing this battle, as in prior years, and the wage gap continues to grow. 2020 has been adversely marked by the pandemic, which hit most of the industries and, in accordance with the information supplied by the businesses that take part in our surveys and polls, tough decisions were made as to the reduction of budgets for compensation and benefits, suspensions, and review of new hires, among other issues leading to a decrease in the percentage initially estimated for adjustments from 39% to 33% in 2020.
In addition, it is important to mention, that some sectors, not only experienced a drop in revenue, but also an increase in some costs not included in the budget relating to coverage of transportation, protocols for protection, safety and hygiene, investment in technology to add remote working stations, among others.
Entertainment, transport, hotel services and tourism, clothing and footwear and shopping malls are some of the sectors that have been most affected by the pandemic and, therefore, they have had to cope with a much more complex scenario.
As mentioned by the different businesses, starting in the second half of 2020, some of the following actions were implemented to mitigate the loss in purchasing power:
• Budget reviews.• Granting of extraordinary
bonuses.• Improvement of benefit packages,
especially focused on providing more flexible working hours.
By Mariela Rendón, Manager People & Change
• Implementation of wellbeing and employee assistance programs, refund of Internet expenses, transportation and per diem, provision of office supplies and discounts in stores and other gifts.
Oil and Energy is an industry that stands out for its attractive compensation package. Despite having ended 2020 with average increases below market (30%), the sector aims at recovering ground in 2021, especially because it has one of the most in-demand profiles: engineers.
The graphic below presents comparative information on general market base salaries for a representative group of industries: IT, Oil and Energy, and Food and Beverages, with the IT sector being one of the best ranked last year in terms of salaries, as a result of the high demand for professionals in this field and business growth.
8
It is premature to define what to expect for the Compensation and Benefit agenda at a general level for 2021, where everything will depend on a prompt but slow economic recovery, and on the events occurring in the forthcoming weeks relating to vaccination programs and control of the pandemic. It is also worth mentioning that several salary bargaining agreements will be resumed after a year in which there was a general understanding of the situation, and focus was placed on preserving as many job positions as possible.
2021 Salary expectations - What to expect in this new context?
At a market level, average salary adjustments of 39% are expected for personnel not covered by collective bargaining agreements and within the main challenges faced by Human Capital management is the definition of a new hybrid work model, managing organizational climate and developing leaders’ skills in a work environment that, in most cases, is here to stay.
$ 0
$ 100,000
$ 200,000
$ 300,000
$ 400,000
$ 500,000
$ 600,000
$ 700,000
Directors Managers Heads Supervisors Analysts
Av erage Base Salary - Projection February 2021
General Market IT Oil and Energy Food and beverages
Customs & FX
Albert Einstein is credited with saying: “if you expect different results, don’t do the same thing over and over again”. Applying this axiom to the solution to a problem, we could claim that, if the proposed solution is always the same and the problem still persists, the time has come for changing the solution.
Exchange regulations being the response to a problem, when these regulations are maintained or, as is the case, their effective period is extended, this clearly has two possible meanings: either the logical reasoning explained above is disregarded, or the regulations are plainly considered successful. Thus, if regulations are deemed successful when the problem remains, this confirms that they were not designed for solving the problem but only for preventing it from worsening.
All this can be helpful in understanding two issues: (i) why the Central Bank of Argentina (BCRA) has extended the effective period of many exchange regulations that were set to expire on March 31, 2021, and (ii) how much longer these will be in place. The rules serve their purpose (considering that little is expected
from them), and they will be in force for some time (as long as they are bearable). Let us take a view at the regulations whose validity has been extended.
Access to the Free Exchange Market (MLC) for the payment of debts for imports of goods.
As the procedure goes, up to the present an importer may make deferred or at sight payments for goods dispatched after July 1, 2020, with the mere requirement of presenting the documentation usually requested for these payments and no complex calculation as to the amount of foreign currency that the financial institution may allow to draw abroad.
However, the case is different when the importer intends to access the MLC to make advance payments or to settle debts for goods shipped to Argentina prior to July 1, 2020. In this case, the calculation of the allowed quota to have access to the MLC will remain in effect until June 30, 2021. We should bear in mind that, for importers to know whether they have a remaining quota available, payments made through the MLC since January 1, 2020 must be
Same problem, same solution
compared to the customs clearances to their name since the same date, and the amount of payments should be lower than the clearances.
But in fact, recently the BCRA has introduced amendments to the norms for ease of understanding of the general criterion; accordingly, now it is expressly allowed to compute within cleared transactions those imports of goods shipped as from July 1, 2020 and brought into the country through a courier service. Although only reduced volumes and amounts may be imported through this procedure, this new rule can be seen as a flexibilization, considering that formerly imports by means of courier could be computed for exit of foreign currency purposes only, not for the customs clearances.
There are operators that do have the benefit of higher quotas — exporters of goods. Last year, it had already been determined that if an importer brought in and traded foreign currency in the MLC as from October 2, 2020 under the item of advances or pre-export financing from abroad, with a term agreed upon for settlement of no less than 180 days, the amount allowed for access to the MLC to pay for imports of goods was extended, in the equivalent to half the amount brought in and traded. To settle the remaining 50%, the importer has the following options available, depending on the date when the foreign currency was brought in and traded:
- If the entry and trade of the advance or pre-export financing was subsequent to January 4, 2020, access to the MLC will be granted for the remaining 50%, provided that these funds are destined
9
to an advance payment for capital assets; this so, because for making advance payments it is necessary to have an import quota available.
- If the entry and trade of the advance or pre-export financing was later than March 19, 2021, access to the MLC for the remaining 50% will be granted to the extent that this transaction corresponds to advance payments for assets classified as inputs used in the production of exportable goods.
Access to the MLC for the payment of principal of financial indebtedness held with third parties abroad.
In connection with financial indebtedness, the impossibility of repaying the principal of financial debts with foreign related companies was extended until June 30, 2021; this restriction does not affect interest, which may still be paid, as usual through history, upon maturity or up to 3 days prior to its due date. Noticeably, the BCRA is concerned about private financial debt, given that some days before it had issued Communication “A” 7230 granting an extension to the refinancing of financial liabilities with third parties provided by paragraph 7 of Communication “A” 7106 for principal maturing between April 1, 2021 and December 31, 2021. Communication “A” 7106 allows access to the foreign exchange market for 40% of the amount falling due, and the remaining portion of principal must be refinanced through new foreign indebtedness for an average term of 2 years.
By means of Communication “A” 7230 the amount of monthly maturities that must be rescheduled is raised, from USD 1 million to USD 2 million; thus, those companies that in
the course of 2020 restructured their debt as mandated by the BCRA, and this year are facing the maturities of rescheduled balances, are released from the refinancing obligation. Likewise, the due dates of new disbursements of loans received from 2020 onwards are not subject to rescheduling.
Aside from the matters considered above, it is possible for other regulations assumed to be effective on a temporary basis, to continue being extended by the authorities. We have learned that their success does not depend on whether they actually improved the existing situation; rather, sometimes it is enough to manage not to worsen it.
Even so, this does not imply that certain flexibilization cannot be expected at some time, sooner rather than later as is everyone’s hope. It is also well known that, even if these regulations may prevent a problem from increasing, maintaining them in force may cause considerable collateral damage.
FederalLandscape
Province: Río Negro
Region: Patagonia
Note 1 (rates): Ministery of Economics, https://www.minhacienda.gob.ar/datos/, 4th quarter 2020.Nota 2 (employment): Ministry of Labour, Employment and Social Security. Report of the registered work, December 2020.
Population Population Density(pob/km2)
Area in km2
638,645 3.1 203,013
Province Region Nation
Employment rate 39.4% 40.8% 40.1%
Unemployment 6.0% 7.2% 11.0%
Activity rate 41.9% 44.0% 45.0%
Employment* (in thousands)
98 392 5,809
Employment and income indexes
*Registered private sector employees by province**Prepared by PwC Argentina based on MECON data
Río Negro limits to the north with the province of La Pampa, to the east with the Buenos Aires province and the Argentine Sea, to the south with Chubut and to the west with Neuquén and the Republic of Chile, the mountain range in between. The Negro river is the most important watercourse in the province, hence its name.
10
Province: Río Negro
Tax revenues by origin, 2020
Total income and expenses, millions of pesos and year-on-year change, %.
Fiscal Result, millions of pesos
Stock of provincial debt, in millions of pesos(1)
Composition of current expenses, 2020
Fiscal indicators
In the period as of December 2020, the Non-Financial Public Administration of Río Negro recorded a negative primary result of ARS 1.9 billion. The value is the result from a total income of ARS 87 billion and primary expenses amounting to ARS 89 billion.
Total income increased 26% compared to the same period in the previous year. In turn, total accrued expenses increased 26.2% compared to the ARS 73 billion incurred in 2019.
At June 30, 2020, total provincial public debt, excluding floating debt, amounted to ARS 38 billion.
Source: Prepared by PwC Argentina based on Undersecretary of Budget Ministry of Finance, Río Negro.
Source: Prepared by PwC Argentina based on Undersecretary of Budget Ministry of Finance, Río Negro.
Source: Prepared by PwC Argentina based on Undersecretary of Budget Ministry of Finance, Río Negro.
Source: Prepared by PwC Argentina based on Undersecretary of Budget Ministry of Finance, Río Negro.
Source: General Directorate of Fiscal Relations, Fiscal Responsibility System, Ministry of Economy.
1) All data are preliminary and subject to revision. Floating Debt is not included.2) Federal Trust Fund for Regional Infrastructure3) Provincial Development Trust Fund4) Securities expressed at Residual Value
11
26.1%
73.9%
Provincial Origin
National Origin-8,000
-6,000
-4,000
-2,000
-
2,000
4,000
2017 2018 2019 2020
Primary result, accumulated Financial Result, accumulated
-
20,000
40,000
60,000
80,000
100,000
0%
50%
100%
150%
2018 2019 2020
Total Accumulated Revenues, right axis Total accumulated expenses, right axis
Year-on-year variation total expenditure Year-on-year variation total income
75%
20%
5% Consumptionexpenses
Current transfers
Property Income
Social Securitybenefits
0.4%
-
20,000
40,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2doTrim2020National Government FTFRI (2)
PDTF (3) Banking and financial inst itutionsConsolidated Debt Government Bonds (4)International Organizations
Río Negro 2020 2019
Ranking position 18 18
Value 376 409
Regional participation 7.9% 6.5%
National participation 0.9% 0.8%
Exports
Source: Prepared by PwC Argentina based on INDEC statistics.
Main exports
Main destinationsIn 2020, the province of Río Negro made sales abroad for a total of USD 376 million, an 8.1% drop compared to 2019. Exported products were mainly fresh fruits (pears and apples), which amounted to USD 278 million, representing a 0.7% fall compared to the previous year, and constituted 73.9% of the province total exports. The second most important were vegetable, legume and fruits preparations, which showed a 6.2 % growth and represented 10.8% of the province exports. The most important export destinations were NAFTA, Mercosur, the European Union and the CIS.
Source: Prepared by PwC Argentina based on INDEC statistics.
Source: Prepared by PwC Argentina based on INDEC statistics.
12
-
50
100
150
200
250
300
350
Primary Products Manufacture ofagricultural origin
Manufacturing ofindustrial origin
Fuel and energy
26%
24%17%
14%
19%Nafta
Mercosur
EU
CIS
Rest of the word
AmountYear-on-year
variationProvince vs Nation
Cement Consumption (Feb-2021)
• Bag 10,672 18.7%
• Bulk 5,927 6.9%
Car Patenting (Feb-2021), quantity
• Automobiles 420 -16.7%
• Motor vehicles 380 31.0%
Supermarket Sales (Jan-2021), million pesos 3,657 -1.9%*
Electricity Demand (Dec-2020), in GWh/Centigrade/MW 110 -1.8%
Flights (Feb-2021), quantity
• Cabotage movements 882 -27.9%
• International movements 3 -78.6%
Tourism (Feb-2020), in units
• Occupied rooms or units 79,182 -37.8%
• Occupied vacancies 221,869 -38.6%
• Travelers 57,904 -43.2%
• Average length of stay of tourists (in days) 9.0 -1.9%
Provinceacitivity
Note cementSource: Portland Cement Manufacturers Association, https://www.afcp.org.ar/copia-de-despacho-total-de-cemento-.
Note Car PatentingSource: SIOMAA, http://www.siomaa.com/InformeSector/Reportes.
Note Supermarket SalesSource: INDEC, National Directorate of Statistics and Prices of Production and Trade.
Note Electricity demandSource: Ministry of Economy. The distributor Emp de Energía de Río Negro SA is considered.
Note FlightsSurce: EANA, Argentine Air Navigation.
Note Tourismsource: INDEC, National Direction of Statistics and Prices of Production and Commerce.
Nation Río Negro*Real change, IPC General Level Base Dec-2016 = 100 - Monthly index of Patagonia region (agregar el ** en el número porcentaje en “Var i.ar”)
13
Traditionally, Río Negro has contributed to the national economy three central activities: fruit production (apple, pear, vine), tourism and the exploitation of hydrocarbons. These three items have been sustained by their competitiveness over time. Important service activities (basically fruit packing and its cold treatment) and industrial activities (juices and timber) have been developed in connection with these productions. Forest production has been expanded as a secondary activity to fruit growing. In economic terms, this activity is the most relevant in the province, based on its capacity to boost employment, its historical importance and its export performance. Pome fruits production is centralized in the Upper Valley of Río Negro, expanding along the course of the river bearing the same name. The province has a port terminal specialized in fruit, the Port of San Antonio Este, which is the gateway to the foreign market for most of the production.
Tourism in Río Negro has become an important source of income for the province, especially for the Andes and the coastal regions. The coasts of Las Grutas and San Carlos de Bariloche in the mountain range are the main tourist cities.
Also, the province has four hydrocarbon basins: Neuquina is the only one developed, shared with Neuquén, Mendoza and La Pampa for energy production. Most of the oil extracted is processed in distilleries in the province of Buenos Aires, and transported through the pipeline that connects the town of Allen with Puerto Rosales (Bahía Blanca).
10.672
509.956
5.927301.742
420
30.141
3.657
97.958
380
24.418
79.182
1.208.272
110
9.455
882
8.403
221.869
2.880.279
57.904
970.944
3
1.608
9,0
3,0
Inflation Reserves and Central Bank Assets
Price of Soy and Oil, index 2004=100
Foreign Trade
Monthly Industrial Estimator
Exchange rate: Spot and Futures Real exchange rate index: Dec-99=1 Income and Expenses of the National Non-FinancialPublic Sector
MacroMonitors
14
0
20000
40000
60000
80000
0%
20%
40%
60%
80%
Nov
-15
Feb-
16M
ay-1
6Au
g-16
Nov
-16
Feb-
17M
ay-1
7Au
g-17
Nov
-17
Feb-
18M
ay-1
8Au
g-18
Nov
-18
Feb-
19M
ay-1
9Au
g-19
Nov
-19
Feb-
20M
ay-2
0Au
g-20
Nov
-20
Feb-
21
Reserves, USD mn, end of period Reserves/AssetsPublic Sector Assets/Assets
00.5
11.5
22.5
33.5
Feb-
99Fe
b-00
Feb-
01Fe
b-02
Feb-
03Fe
b-04
Feb-
05Fe
b-06
Feb-
07Fe
b-08
Feb-
09Fe
b-10
Feb-
11Fe
b-12
Feb-
13Fe
b-14
Feb-
15Fe
b-16
Feb-
17Fe
b-18
Feb-
19Fe
b-20
Feb-
21
BrazilUnited StatesChinaEuro
-40.0%
-30.0%
-20.0%
-10.0%
0.0%
10.0%
Feb-
19M
ar-1
9Ap
r-19
May
-19
Jun-
19Ju
l-19
Aug-
19Se
p-19
Oct
-19
Nov
-19
Dec
-19
Jan-
20Fe
b-20
Mar
-20
Apr-2
0M
ay-2
0Ju
n-20
Jul-2
0Au
g-20
Sep-
20O
ct-2
0N
ov-2
0D
ec-2
0Ja
n-21
15.0%20.0%25.0%30.0%35.0%40.0%45.0%50.0%55.0%60.0%
Jan-
17M
ar-1
7M
ay-1
7Ju
l-17
Sep-
17N
ov-1
7Ja
n-18
Mar
-18
May
-18
Jul-1
8Se
p-18
Nov
-18
Jan-
19M
ar-1
9M
ay-1
9Ju
l-19
Sep-
19N
ov-1
9Ja
n-20
Mar
-09
May
-20
Jul-2
0Se
p-20
Nov
-20
Jan-
21M
ar-2
1
CPI*Inflation prospects
-200
-100
0
100
200
300
Apr-1
9M
ay-1
9Ju
n-19
Jul-1
9Au
g-19
Sep-
19O
ct-1
9N
ov-1
9D
ec-1
9Ja
n-20
Feb-
20M
ar-2
0Ap
r-20
May
-20
Jun-
20Ju
l-20
Aug-
20Se
p-20
Oct
-20
Nov
-20
Dec
-20
Jan-
21Fe
b-21
Soy Oil
-2,000
0
2,000
4,000
6,000
8,000
Aug-
15O
ct-1
5D
ec-1
5Fe
b-16
Apr-1
6Ju
n-16
Aug-
16O
ct-1
6D
ec-1
6Fe
b-17
Apr-1
7Ju
n-17
Aug-
17O
ct-1
7D
ec-1
7Fe
b-18
Apr-1
8Ju
n-18
Aug-
18O
ct-1
8D
ec-1
8Fe
b-19
Apr-1
9Ju
n-19
Aug-
19O
ct-1
9D
ec-1
9Fe
b-20
Apr-2
0Ju
n-20
Aug-
20O
ct-2
0D
ec-2
0Fe
b-21
Comercial Balance, USD mn Exports, USD mnImports, USD nn
0
200,000
400,000
600,000
800,000
1,000,000 Total income Current expenses
1434547494
114134154
Spot Jun-21Aug-21 Sep-21
Source: Own calculations based on CPI of City of Buenos Aires and UTDT Source: Own calculations based on Central Bank of Argentina
Source: Own calculations based on CBOT and WTI NYMEX
Source: Own calculations based on INDEC
Source: Own calculations based on INDEC
Source: Own calculations based on Rofex Source: Own calculations based on the Central Bank of Argentina Source: Own calculations based on Secretary of Finance
Activity and Prices 2018 2019 2020 Nov-20 Dec-20 Jan-21 Feb-21Real GDP, var % y/y -2.6% -2.2% -9.9% - -4.3% - -
CPI Federal Capital, var % y/y 45.5% 50.6% 30.5% 30.1% 30.5% 32.2% 33.6%
CPI San Luis, var % y/y 50.0% 57.6% 41.8% 39.9% 41.8% 44.5% 45.8%
Industrial Production, var % y/y -5.0% -6.3% -7.6% 4.3% 5.0% 4.4% nd
International Reserves (end period, USD mn) 65,786 44,848 39,410 38,652 39,410 39,515 39,518
Import Cover (month of reserves) 12.06 10.96 11.17 9.39 10.08 10.28 10.64
Implicit exchange rate (M0 / Reserves) 21.42 42.26 62.68 57.62 62.68 62.79 60.96
$/USD, end period 37.81 59.90 84.15 81.30 84.15 87.30 89.83
External Sector 2018 2019 2020 Nov-20 Dec-20 Jan-21 Feb-21Exports, USD mn 61,781 65,116 54,884 4,500 3,544 4,912 4,775Imports, USD mn 65,482 49,124 42,354 4,115 3,908 3,844 3,713Comercial Balance, USD mn -3,701 15,992 12,530 385 -364 1,068 1,062
Currency liquidation by grain exporters, USD mn 20,202 23,720 20,274 1,734 1,691 2,140 1,810
Laboral* 2018 2019 2020 Nov-20 Dec-20 Jan-21 Feb-21Unemployment, country (%) 9.1 8.9 11.0 - 11.0 - -
Unemployment, Greater Buenos Aires (%) 10.5 10.0 12.6 - 12.6 - -
Activity rate(%) 46.5 47.2 45.0 - 45.0 - -
Fiscal** 2018 2019 2020 Nov-20 Dec-20 Jan-21 Feb-21
Income, $mn 3,382,644 5,023,566 6,635,239 648,976 679,641 772,860 716,595
VAT, $mn 1,104,580 1,532,597 1,905,385 192,370 203,985 232,832 212,043
Income tax, $mn 742,052 1,096,521 1,467,303 156,602 166,887 149,585 146,917
Social Security System, $mn 878,379 1,175,793 1,485,127 127,794 132,843 188,265 155,890
Export Tax, $mn 114,160 398,312 387,643 40,259 28,338 79,423 64,434
Primary expenses, $mn 2,729,251 3,795,834 6,311,785 500,229 731,257 548,030 509,791
Primary result, $mn -338,987 -95,122 -1,749,957 -58,693 -307,628 24,074 -18,757
Primary result, $mn 513,872 914,760 671,928 73,662 12,141 46,376 47,271
Fiscal results, $mn -727,927 -819,407 -2,292,830 -127,029 -318,909 -3,030 -64,316
Financial - Interest rate*** 2018 2019 2020 Nov-20 Dec-20 Jan-21 Feb-21Badlar - Privates (%) 48.57 41.75 34.21 33.02 34.21 34.15 34.06Term deposits $ (30-59d Private banks) (%) 46.22 40.80 34.75 33.62 34.75 34.75 34.66Mortgages (%) 47.70 47.51 32.29 32.79 32.29 29.23 30.26Pledge (%) 24.88 30.54 32.29 26.53 32.29 27.72 28.50Credit Cards (%) 61.11 76.28 41.93 42.18 41.93 42.36 42.75
Commodities**** 2018 2019 2020 Nov-20 Dec-20 Jan-21 Feb-21Soy (USD/Tn) 342.3 326.9 350.1 419.6 443.6 504.3 507.8Corn (USD/Tn) 145.0 150.9 143.0 163.6 171.4 202.9 216.5Wheat (USD/Tn) 182.1 181.5 201.9 219.9 220.5 240.7 239.5Oil (USD/Barrel) 64.9 57.0 39.3 41.3 47.1 52.1 59.1
* Quarterly figure. The year corresponds to Q4** includes intrasector public interest*** data 2012/13/14 corresponds to the daily weighted average of December**** One moth Future contracts, period averagep: provisional
Source: INDEC, Secretary of Finance, Ministy of Economy, BCRA,AFIP, Ministry of Treasury and Finance of the City of Buenos Aires, CIARA, CBOT, NYMEX
Table of indicators
15
José María Segura | [email protected] | +54 11 4850 6718
Leandro Romano | [email protected] | +54 11 4850 6713
Paula Lima | [email protected] | +54 11 4850 6028
Claus Noceti | [email protected] | +54 11 4850 4651
Our services
Contacts
Macroeconomic analysis Sectorial/Quantitative Litigation Regulatory
Monthly/quarterly report
Conferences
Projections and data
Follow up and projection by sector
Quantification of demand
Applied econometrics
Revenue forecast Surveys
Support of experts’ reports relating to economic matters
Dumping
Antitrust
Tax benefits Benefit/price structure
Quantification of impacts
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, Price Waterhouse & Co. Asesores de Empresas S.R.L., its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.
© 2021 In Argentina, the member firms of the global network of PricewaterhouseCoopers International Limited are Price Waterhouse & Co. S.R.L, Price Waterhouse & Co. Asesores de Empresas S.R.L. and PwC Legal S.R.L, each of which, either separately or jointly, are identified as PwC Argentina.