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Informe Mensual Económico Financiero N° 334 – Diciembre de 2017

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In general terms, the negotiation framework implies that the absolute funding levels

of Nation and Provinces are not modified, but the flows vary, and in that sense

Buenos Aires is benefitted.

From the macroeconomic data of the conjecture two are favourable to the

government; i) the GDP of the first quarter, according to the Monthly Estimator of

Economic Activity (EMAE), would have grown in respect to the second quarter at an

annualized rate of 4%, although in September the growth over August was only 0.1%;

ii) the fiscal result of October showed a deficit of 67.4 billion, but with a public

expenditure slowing down its growth rate, compared to the increase in resources.

But there were also two adverse data: i) the most predictable is the deepening of the

Trade Balance deficit in October, 955 million dollars, which brings the total

accumulated in the year to 6,115 million; ii) the downward resistance of the inflation

rate, that in the quarter of July-October was of 1.6% monthly average, while it is

projected to be 1.5%–1.9% for November; on December, around 2.5% estimated.

On the other hand, the industry has been recovering in a context of volatility, in the

order of 2.0% in the first 10 months of this year. The impulse comes from the

production of cement, steel and chemical inputs, adding to the automotive sector.

Even when the results are moderately stimulating, it is far from the 2011-2013 peaks.

In this context, in the short term scenario, the Central Bank maintains a strategy of

strong monetary sterilization via Lebac (Letters of the Central Bank) and, at the same

time, maintains a high interest rate. In December, in particular, changes in the rules

of integration of reserve requirements will contribute to this.

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

esta Síntesis Ejecutiva.