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Informe Mensual Económico Financiero N° 337 – Marzo de 2018

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5

To the extent that external financing becomes more scarce, the most likely scenario

is that of a more depreciated exchange rate and an inflation rate higher than that set

by the Ministry of Finance and even by the one foreseen by the consensus of the

analysts. This scenario requires a change in relative prices that slows down the

growth of domestic spending and promotes exports, and would imply a moderate

deceleration of GDP growth (partly due to the effect of the drought and partly to the

need to reorient spending).

Economic agents have registered this crossroads of the economy, which also

coincides with wage negotiations, and this would be one of the factors that explains

the discrimination of the Argentine debt bonds, whose referred risk premium has not

yet returned to the December levels.

The advances that can be achieved in relation to cost reduction, deregulation and the

release of obstacles to competitiveness (on what there are initiatives in Parliament)

can help offset the effects of a hardening of the international scenario, increasing the

flexibility of the economy to absorb external shocks. In the same sense, infrastructure

and energy projects that can generate foreign direct investment income in specific

sectors.

When comparing the National CPI of December 2017 versus the same period of 2016

the result is 24.8%, but if it is disaggregated into Goods and Services the percentages

are 20.1% and 34.2%, respectively. And, when they are classified in Seasonal, Core

and Regulated CPI, 21.46%, 21.13% and 38.70% are obtained in each case. In

wholesale prices, the general Level was 18.8%, but the item Electric power rose

88.4%. On the other hand, the Salaries index grew 27.3% surpassing CIP. The

pressure of the process of updating tariffs on price indexes is thus evident.

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

esta Síntesis Ejecutiva.