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Informe Mensual Económico Financiero N° 328 – Junio de 2017

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EXECUTIVE SUMMARY

Capital flows to emerging economies are maintained, the adverse news

represents China’s monetary tightening and Brazil’s political crisis; at the moment

both facts seem encapsulated.

Anyway, they are adverse news for Argentina, due to the negative effect of

China’s problems on commodity prices and the economic impact (lower exports);

and political, if Brazil political crisis continues and contaminates its economy and

therefore compromises the anemic recovery that was expected for the current

year.

Precisely, in the first quarter our country’s exports slightly (1.8%) compared to the

same period last year, with a better execution of industrial Manufactures in

quantities. In contrast, imports grew 9.1% in the four-month period, generating a

trade balance of -1,017 billion dollars.

The fiscal deficit increased in April driven by a 38% growth in primary

expenditures, as opposed to 35% in revenues. The official primary deficit target for

2017, 4.2% of GDP, is attainable; but fiscal dominance reduces the margins of the

monetary policy, demanding the Central Bank a great effort of sterilization. In May

(with low increased in revenue) and June, fiscal imbalances will tend to increase.

There would have been a moderate slowdown in inflation May, following the

adverse results in April. Economic activity gradually improves, led by public works

and, to a lesser extent, by consumption, after the salary levels arising from

negotiations and adjustments in pensions began to influence.

The economy has entered a period of greater volatility, given the proximity of

midterm elections, which can lead to postponement of investment decisions and

also expenditure.

El IAEF agradece la colaboración de la Sra. Marta Álvarez – Executive English en la traducción de

esta Síntesis Ejecutiva.