Business Monitor International


Argentina Business Forecast Report

Published 24 September 2014

  • 53 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
 
$1,195.00
Argentina Business Forecast Report

The Argentine economy is reeling following the January 2014 currency devaluation. Economic growth has slowed markedly, prompting us to revise down our real GDP forecasts, as soaring inflation discourages investment and erodes purchasing power. Furthermore, the slowdown in economic activity has prompted a widening of the fiscal deficit, in line with our expectations, as government spending accelerates, and weak growth weighs on revenues. Moreover, we see further weakness for the Argentine peso, as the authorities allow for a gradual depreciation of the currency to address a widening spread between the black market and official exchange rates.

Politically, we are starting to see signs of strain. The perception of heightened street crime prompted incidents of vigilante justice in March and April, undermining the narrative that President Cristina Fernandez de Kirchner has presented, in which she, and her husband Nestor Kirchner before her, presided over a decade of economic expansion and social inclusion. Moreover, the long-running legal battle between the Argentine government and investors who have refused restructuring offers on defaulted debt - the so-called 'holdouts' - is likely to exacerbate President Cristina Fernandez de Kirchner's weak political position. While we expect that political pressures will not boil over into larger protests, with moderate policies and candidates gaining ascendance up to October 2015 general election, we highlight the potential for greater social unrest as the economy slows this year and crime remains high.

Key Forecast Changes

  • We forecast real GDP to expand by 1.7% in 2015, a downward revision from our previous forecast of 3.1%, and implying only a modest improvement from forecasted growth of 0.4% in 2014. Argentina's economic recovery will be muted in the coming quarters, as currency weakness and high inflation weigh on private consumption. In addition, uncertainty over the trajectory of economic policy following the country's...

Table of Contents

Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Ratings
7
Domestic Politics
8
Rising Crime Concerns Another Challenge For Fern-ndez
8
Table : Political Over view
8
Long-Term Political Outlook
10
Significant Structural Challenges Ahead
10
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Ratings
13
Economic Activity
14
Weakening Consumption And Investment To Drive GDP Slowdown
14
table: GDP By Expenditure
14
Expenditure Breakdown
14
Exchange Rate Policy
16
ARS: Peso To Gradually Weaken Over Next Several Quarters
16
Table: Currency Forecast
16
Balance Of Payments
18
Narrower Trade Surplus To Widen Current Account Deficit
18
Table: Current Account
19
Fiscal Policy
20
2014 To See Largest Budget Shortfall In A Decade
20
Table: Fiscal Policy
21
Chapter 3: 10-Year Forecast
23
The Argentina Economy To 2023
23
table : Long-Term Macr oec onomic Forecasts
23
Chapter 4: Business Environment
25
SWOT Analysis
25
BMI Business Environment Risk Ratings
25
Table : BMI Busi ness And Operati on Ris k Rati ngs
26
Table : BMI Legal Framew ork Rati ng
27
Infrastructure
28
Table: Labour Force Quality
28
Market Orientation
29
TABLE: LATIN AMERICA - ANN UAL FDI INFLOWS
29
Table : Trade And Investme nt Rati ngs
30
Operational Risk
31
TABLE: Top Export Destinations (USDmn)
31
Chapter 5: Key Sectors
33
Freight Transport
33
Table: Rail Freight
34
Table: Air Freight
34
Table : Maritime Freig ht
35
Pharmaceuticals & Healthcare
36
table : US - Refi ned Zinc Producti on & Consumpti on ('000 tonnes )
38
Table: Healthcare Expenditure Trends, Historical Data And Forecasts
38
Other Key Sectors
41
Table: Oil and Gas Sector Key Indicators
41
table : Telec oms Sect or Ke y Indicat ors
41
table: Infrastructure Sector Key Indicators
41
table: Defence and Security Sector Key Indicators
42
table: Food and Drink Sector Key Indicators
42
table: Autos Sector Key Indicators
42
Chapter 6: BMI Global Assumptions
43
Global Outlook
43
Emerging Market Deceleration
43
Table : Global Assumpti ons
43
Table : Devel oped States , Real GDP GrowtH , %
44
Table : BMI VERSUS BLOO MBERG CON SENSUS REAL GDP GROWTH FORECASTS, %
44
Table : Emergi ng Mar kets , Real GDP Growt h, %
45

The Argentina Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Argentina and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Argentina's economic, political and financial prospects through end-2018, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

  • Forecast the pace and stability of Argentina's economic and industry growth through end-2018.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Argentina's country risks against regional peers using BMI's country comparative Risk Rankings system.
  • Evaluate external threats to doing business in Argentina, including currency volatility, the commodity price boom and protectionist policies.

The Argentina Business Forecast Report by Business Monitor International (BMI) includes four major sections: Economic Outlook, Political Outlook, Business Environment and Key Sector Outlook.

Economic Outlook:

How will the Argentina economic policy-making and performance impact on corporate profitability over 2014-2018?

BMI provides our fully independent 5-year forecasts for Argentina through end-2018 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Argentina Business Forecast Report features BMI's forecasts with supporting analysis for 2014 through to end-2018, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Rankings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector exposure).
  • Global Assumptions - forecasts for each year to end-2018 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Argentina and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Argentina, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Argentina over the next 5-years?

BMI's Argentina country Risk Rankings evaluate the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Argentina Market - Political Strengths, Weaknesses, Opportunities and Threats facing Argentina.
  • Political Stability and Risk Assessment - BMI's Risk Rankings assess explicit short- and long-term risks to political stability; latest ankings, rankings and trends for Argentina's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.

Key Benefits

  • Benchmark Argentina's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Business Environment

Business Environment Risk Rankings with SWOT Analysis - Business Environment Risk Rankings for Argentina, benchmarked against rankings for regional neighbours.

Country Competitiveness - Competitiveness of Argentina's business operating environment in supporting corporate growth and profitability, compared with regional neighbours.

Business Environment Contents

  • Domestic Environment - Transparency, cronyism and corruption; labour market flexibility; corporate tax burden; interest rate levels; sophistication of banking sector and stock market; levels of business confidence; infrastructure and IT.
  • Foreign Direct Investment - Analysis of foreign investment regime; foreign ownership laws; attractiveness of business environment to foreign investors.
  • Foreign Trade - Analysis of trading environment, government trade policy, liberalisation measures, tariffs and membership of trade areas.

Key Benefits

  • Assess your company's evolving exposure to country specific operational and business risks, using BMI's in-depth analysis of the legal and regulatory business environment.
  • Understand your market's comparative strengths and weaknesses in the key areas of commercial infrastructure and business institutions, using BMI's proprietary global Business Environment Risk Rankings.

Key Sector Outlook

Which industry sectors in Argentina will grow fastest, and where are the major investment opportunities in the market?

BMI's identifies investment opportunities in Argentina's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry with developments over 2009-2013, covering major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2014-2018, using BMI's proprietary industry modeling technique, which incorporates all key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across, and within, each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express