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Informe Mensual Económico Financiero N° 330 – Agosto de 2017

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EXECUTIVE SUMMARY

The different regions grow in synchronized mode in the US, the European Union

and emergent Asia at an annual rhythm of 3.5 %, similar to the historical. Latin

America has lagged behind, beyond the gradual recovery of Argentina.

In spite of this, commodity prices are stable, grains 30% below the average of the

period 2011-2014, contributing to export staging. Even though the capital flow

towards the emerging world in 2017 is high, the predominance of the “financial

dollars” over the “real dollars” is vulnerability.

The political crisis of Brazil caused a decline in growth estimates of its economy. At

the same time, the labour reform undertaken is important for Argentina, because it

allows Brazil to gain competitiveness in the bilateral relationship and be more

attractive when luring investments.

The Argentinian economic policy shows a dilemma in two fronts: i) fiscal gradualism

forces monetary policy to be very expansive in relation to inflation goals of the

Central Bank of Argentina ii) income policy, especially wages, is incompatible with

those goals.

In the first semester the primary deficit target was surpassed; in the second there

would be an excess that would consume that margin, determining an expansion of

20% in Financial Liabilities of the Central Bank, to what it would have to be added

an extra 10% for the income of the letters of the central bank. This abundance of

pesos influences prices and Exchange rate.

In 2018 both inconsistencies will remain and the Parliament´s treatment of the

Budget of that year, that would take place before the elections, will anticipate the

debate. To keep them has limits in: i) Argentina´s capacity to place debt; and ii) the

amount of pesos that Argentineans would like to keep in their portfolios.

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

esta Síntesis Ejecutiva.