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ECONOMIC & COMMERCIAL SECTION
65 Brook Street, London W1K 4AH
Tel: 020 7318-1300 Fax: 020 7318-1301
[email protected]
www.argentine-embassy-uk.org
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Recent official macroeconomic data
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Economic activity up by 1.1% in August
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Industrial activity up by 1.5% in September
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Primary fiscal surplus of 223 million pesos in September
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Tax collection up by 9.8% in September
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Inflation rate at 0.7% in September
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Trade surplus of US$ 926 million in September
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Record oilseeds harvest leading to export rise
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Expansion of exports from the forestry sector
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Rise in exports of tea and yerba mate
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Growing interest in the olive oil industry
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Incentive scheme for IT investments in Buenos Aires province
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IMF evaluation of Argentine economy
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World Bank approves US$ 150 million loan for transport project
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IDB approves US$ 120 million loan for road improvement
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Telefonica and Argentina settle dispute
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BACC Business Networking Day
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Seminar on IT and Internet business
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Recent official macroeconomic data
• Economic activity up by 1.1% in August
According to the latest Economic Activity Monthly Estimate (EMAE)
released by INDEC (the National Statistics Institute), the economy grew
by 1.7% in August compared with July and 0.1% compared with the same
month of 2008. The accumulated growth of the last 12 months compared
with the previous 12 month period is 1.7% (Note: the EMAE index shows
the progress of economic activity on a monthly basis).
• Industrial activity up by 1.5% in September
INDEC’s figures of the Industrial Monthly Estimate (EMI) showed an
increase of 3.1% (1.5% seasonally adjusted) in September compared
with August and of 0.1% (-0.5% seasonally adjusted) compared with the
same month of 2008. In the first nine months of 2009 industrial activity
fell by 1.3%. The figures for each major industrial sector in September
are:
food and beverages: +4.3% (monthly) and +6.5% (y.o.y);
textile industry: +3.3% (monthly) and +5.8% (y.o.y);
paper and cardboard: +7.9% (monthly) and +6.7% (y.o.y);
oil refining: -7.8% (monthly) and –15.7% (y.o.y);
chemical industry: -0.5 % (monthly) and +9.1% (y.o.y);
non-metallic minerals: +2.9% (monthly) and +1.2% (y.o.y);
metallic basic industries: +0.9% (monthly) and -16.0% (y.o.y);
car industry: +14.4% (monthly) and -11.5% (y.o.y).
• Primary fiscal surplus of 223 million pesos in September
The Ministry of Economy announced that the primary fiscal surplus (the
difference between public revenue and public spending before debt
payments) in September amounted to 223.2 million pesos (approximately
US$ 59 million), which represents a fall of 93.7% compared with the
same month of 2008. The government’s primary expenditure grew in
September by 28.6% reaching 20.5bn pesos, while primary revenue
increased by 6% to 20.7bn pesos. In the first nine months of the year,
total government expenditure rose by 30% to 170.7bn pesos, while
revenue grew by 10.8% to 179.4bn pesos, generating a fiscal surplus of
8.7bn in this period.
• Tax collection up by 9.8% in September
According to AFIP (the Federal Agency of Public Revenue), total public
revenue in September amounted to 28.2bn pesos (approximately US$
7.4bn), while net tax collection (meaning what AFIP collects for public
sector spending) increased by 9.8% on a y.o.y. basis, reaching 26.2 bn
pesos (US$ 6.9bn). The y.o.y. tax collection growth was supported by
positive outcomes in VAT, the tax and pension regularisation scheme, the
excise duty for the externalisation of capital (Law No 26476) and
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increased contributions.
• Inflation rate at 0.7% in September
The Consumer Prices Index (CPI) for the city of Buenos Aires and the
Metropolitan area showed an increase of 0.7% in September compared
with August and of 6.2% compared with the same month of 2008. The
accumulated figure for the first nine months of 2009 is 5.0%. The sectors
that showed the largest increases in September were clothing (1.5%),
education (1.1%) and food and beverages (0.9%), while smaller rises
were recorded in transport and communications (0.3%), other goods and
services (0.3%) and entertainment (0.4%). The Wholesale Prices Index
increased by 0.8% and the Construction Costs Index by 0.4% in
September.
For further official figures, please visit the following websites:
Ministry of Economy and Production www.mecon.gov.ar
National Statistics Institute www.indec.gov.ar
Federal Administration of Public Revenue www.afip.gov.ar
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• Trade surplus of US$ 926 million in September
Argentine international trade showed a surplus of US$ 926 million in
September 2009, representing a decrease of 43% compared with the
same month of 2008. Exports amounted to US$ 4.5 bn, while imports
totalled US$ 3.6 bn. The decrease in exports compared with September
2008 was the result of a 20% drop in export prices and a 17% fall in
export volumes. Imports fell by 31% compared with September 2008, as
a result of a 19% reduction in prices and a drop of 15% in volume. The
accumulated surplus for the first nine months of 2009 reached US$ 13.2
bn, representing an increase of 31% compared with the same period of
last year. Total exports in the nine months to September 2009 totalled
US$ 41.1 bn, while imports amounted to US$ 27.8 bn, decreasing by 25%
and 38% respectively compared with the same period of 2008.
• Record oilseeds harvest leading to export rise
According to a report by the Buenos Aires Grains Board, land dedicated to
oilseed production this year may reach a record level of 19 million
hectares, up by 1.3 million hectares from 2008, leading to a strong
increase in soyabean exports. Other estimates put the figure even higher,
such as consultant firm Agritrend which is forecasting 19.4 million
hectares producing a 2009/10 harvest of 51-52 million tonnes, about 20
million more than the previous season which was hard hit by the drought.
This forecast is similar to a US Department of Agriculture one, which
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places the figure at 52.5 million tonnes. With these projections soyabean
exports are expected to rise to US$ 11.4 bn.
• Expansion of exports from the forestry sector
The 13th World Forestry Congress took place in Argentina in October,
showing a growing interest in the country as a supplier of forestry
products. With 205 participating firms and over one thousand business
meetings during the week of the Congress, the results of the business
rounds were very positive for the Argentine forestry sector, which closed
deals for US$ 36 million, most of them involving exports from local
suppliers to overseas buyers. The main commercial interest was focused
on wooden decks and floors, building materials and native high quality
woods such as Lapacho. There was also a great deal of interest in
investment opportunities in forests and timber processing in Argentina.
• Rise in exports of tea and yerba mate
Exports of tea and yerba mate increased in value in the first eight months
of 2009 as a result of a rise in average prices, although the total volume
dropped compared with the same period of 2008. According to a report by
the National Animal Health and Agri-Food Quality Service (SENASA),
between January and August exports of these two infusions amounted to
US$ 43.5 million, up by 7.5% (y.o.y.), as a consequence of a rise of 12%
in the price per tonne. In the case of yerba mate, Syria remains the main
buyer of Argentina's production, while its main market for tea is Chile.
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• Growing interest in the olive oil industry
After a first wave of projects linked to tax incentive schemes, the olive oil
business is experiencing a new wave of investment. While it still is a
relatively small industry, with a turnover of around US$ 150 million and a
per capita consumption of only 100 ml per person each year, the market
is growing together with new plantings in San Juan, Catamarca , La Rioja,
Mendoza and the province of Buenos Aires. New projects are mainly
aimed at meeting international demand, taking advantage of Argentina´s
counter-seasonal olive oil production. Although the world largest
producers are European Mediterranean countries, Argentina is the
Americas’ largest producer, ranked 11th in the world, with an output of
30,000 tonnes a year. The potential of the olive oil business in Argentina
is attracting some of the major European players, especially those from
Spain seeking to diversify their investments. Some of the Argentine
production of extra virgin olive oil is being exported to non-traditional
markets, such as the People's Republic of China.
• Incentive scheme for IT investments in Buenos Aires province
The province of Buenos Aires has approved the regulations that put into
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force Law 13649, which establishes a regime for promoting the software
industry with tax exemptions for IT companies located in the province.
The new regulations set up a provincial Registry of software and IT
companies to which firms have to apply to qualify for the tax benefits. The
new legislation provides for exemptions of up ten years in income tax,
property tax and stamp tax, the percentages being dependent on the
output of each company.
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• IMF evaluation of Argentine economy
The Economy Minister Amado Boudou announced that Argentina would
allow an evaluation of its economy by the International Monetary Fund
(IMF) on condition that it does not interfere in domestic policy. According
to the Minister, it would be an evaluation, an exchange of information, not
an audit. This possibility would facilitate the return of Argentina to the
main international capital markets, opening up international credit
markets and making it possible to secure international financing at lower
rates.
• World Bank approves US$ 150 million loan for transport project
The World Bank approved a US$150 million loan in support of the
Metropolitan Areas Urban Transport Project (PTUMA) to improve the
quality and sustainability of urban transport systems in Argentine
metropolitan areas. By the creation of a Metropolitan Transport Agency
(MTA) for the Buenos Aires metropolitan area, the capacity for transport
planning and management at the metropolitan level will be strengthened.
The urban transport improvements in Argentina's medium-size
metropolitan areas will address issues such as the underinvestment in
road infrastructure and maintenance, increased traffic congestion in urban
areas, the decreasing quality of public transport service and the limited
intermodal integration. The demand for public transport has increased in
Argentina over recent years and usage has grown in the case of the Metro
by 19% and of suburban railways by 17%. In this context, the urban
transport sector needs to enter a new phase in which significant
infrastructure investments are carried out to adequately meet increasing
demand. The National Government has proposed a National Urban
Transport Policy to set national guidelines to address macro challenges
that cannot be resolved at local level, and has given maximum priority to
the public transport systems throughout the country and will continue to
do so because they contribute to the development of the domestic urban
markets. The World Bank Adaptable Programme Loan1 (APL1) will extend
for the period 2010-2016 a total loan amount of US$150 million.
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IDB approves US$ 120 million loan for road improvement
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The Inter-American Development Bank (IDB) approved a US$120 million
loan to Argentina to finance road improvements and maintenance works
in various provinces, including La Pampa, Entre Ríos, Córdoba and
Formosa. In addition, the loan will finance the implementation of a
diagnostic assessment to improve road network management, including
better highway safety, maintenance and weight control. The loan is the
first part of a US$2.5 billion conditional credit line for Argentina that will
support investments to improve, expand, and rehabilitate the provincial
road network throughout the country. The conditional credit line is
effective for 20 years and its loans are denominated in US dollars, with
interest rates linked to the London Interbank Offered Rate (LIBOR). The
first loan has a grace period of 4.5 years and an amortisation period of 25
years.
• Telefonica and Argentina settle dispute
The Spanish multinational Telefonica and Argentina have discontinued
their arbitration at the International Centre for Settlement of Investment
Disputes (ICSID). The proceedings had been suspended since October
2006 because the parties worked towards a settlement agreement.
Telefonica initiated its claim in 2002, alleging breaches of the SpanishArgentina Bilateral Investment Treaty. The Spanish firm held a multibillion dollar stake in Argentina’s local telephone company when in 2001
landline rates were frozen in response to the country’s financial crisis. In
recent years the Spanish firm has seen a boost in revenues outside of
landline telephone calls, particularly in the mobile phone market.
Revenues in Argentina for the first half of 2009 totalled 1.3 bn euros,
according to Telefonica’s financial statements.
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• BACC Business Networking Day
The 2009 Business Networking Day on Argentina, organised by the British
Argentine Chamber of Commerce (BACC) with the support of the Embassy
and the sponsorship of Gaucho Restaurants and The Food, Water and
Energy Company, took place on 7 October at the Official Residence in
Belgrave Square. Speakers from government agencies and the private
sector from both Argentina and the UK made their presentations to an
audience of around 100 local businessmen who attended the event
throughout the day, discussing the challenges and opportunities in trade
and investment between the UK and Argentina. Keynote speaker
Fernando Sedano, Operations and Investor Services Manager of the
National Agency of Investment Development (Prosper.Ar), said that
Argentina is well positioned to take advantage of the new global scenario
"in a world where countries like China and India add to their middle class
millions of people each year who are increasingly demanding more
sophisticated foods". He referred to the factors that make Argentina an
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attractive destination for European and UK investment, “having a solid
foundation for sustainable growth, skilled human resources with
innovation capacity, abundance of natural resources, biodiversity and
environmental sustainability and access to a broad regional market”.
Other presentations highlighted the potential of specific sectors such as
agribusiness, IT and Internet, communications, software development and
financial services amongst others. Panels included the following issues and
speakers:
• “Finance and Investment after the credit crunch: projects, challenges
and opportunities between the UK and Argentina”: Sir Humphrey Maud
(Former British Ambassador to Argentina); David Royce (Partner Ernst & Young); Graham Dallas (Head of the Americas – London Stock
Exchange) and Alberto Lasheras-Shine (Partner - Beccar Varela
Argentina).
• “Innovative Services and Businesses”: Dr. Richard Dixon (Senior Editor
- The Times); Zeev Godik (CEO – Gaucho Restaurants); Chris PriorWilleard (VP - The Bank of New York Mellon); Ricardo Moral (Senior
Manager- Globant) and Diego Meller (Co-Founder – Livra.com).
• “Managing Risks in Commodities Markets” (Workshop by The Grain and
Feed Trade Association – GAFTA): Joanna Lees (General Manager and
GAFTA team).
• “British Companies doing business with Argentina: key opportunities”
(Workshop by UK Trade & Investment): Paul Eadie (Advisor for Latin
American - UKTI).
• “Food, Agribusiness and a Changing World”: Gustavo Idigoras (Minister
Counselor, Agricultural Affairs - Argentine Embassy in Brussels) and
Mark Mark McLornan (Director – Agroterra).
• “Communications and Global Trade”: Keynote speaker Sir Michael Rake
(Chairman – BT Group).
• Seminar on IT and Internet business
On 4 December the Embassy and the BACC will host the seminar “IT and
Internet Business in Argentina. New Projects and Investments”, at the
Official Residence, 49 Belgrave Square. Speakers from the government
and the private sector from Argentina and the UK will discuss the
opportunities offered by Argentina in this field, which has increasingly
been growing in recent years and is attracting a number of the world’s
major companies in the business as a base for regional or global
operations. For further information and registration (limited places) please
contact the Embassy’s Economic and Trade Section, [email protected] or the BACC, [email protected].
If you wish to sign up to receive this monthly Newsletter in your mailbox, please contact
[email protected]. If you also wish to receive the Embassy’s Cultural
Bulletin, which includes a list of Argentine cultural activities in London and the UK,
please send an e-mail to [email protected].
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