ECLAC forecasts that Argentina’s economy will close 2016 with a fall of 1.5%

Latin America


The agency estimates that the contraction in activity will result from the combined effect of “rates, inflation and lower consumption”

The national economy will close the year with a contraction of 1.5%, estimated Tuesday the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) , which attributed the decline to theimpact of government policies on “rates and inflation , ” it which in turn affects a “lower real wages and consumption.”

“The first months of this year have been marked by the rise in prices of public services, due to the elimination of subsidies, for the acceleration of inflation , due to the release of the exchange rate, and there is also a fall real wages , with negative impact on consumption and activity , “he toldDyN the body ‘s executive secretary, Alicia Barcena .

Overall, Latin America and the Caribbean show a contraction in the growth rate of -0.8 percent.

“We are doing ( for Argentina) a projection of -1.5% , which represents a downward revision compared to -0.8 in April. This patch is made depending on the context of economic policy which is seeking to correct some imbalances exhibiting the economy , “said the head of ECLAC.

For South America a contraction of 2.1% is expected in 2016 , “mainly affected by a deterioration in their terms of trade, lower external demand and a significant slowdown in domestic demand, reflecting a significant drop in domestic investment “.

Growth will be led by Dominican Republic (6.0%), Panama (5.9%), and Nicaragua and Bolivia (4.5%).

Susana Malcorra, from Argentina, Becomes Candidate for U.N. Secretary General

Latin America

Who possibly becomes the first woman to head the UN, Foreign Minister Susana Malcorra Argentina, pronounced with respect to the major issues affecting the Mercosur. From research to expresident Argentina Cristina Fernandez, the removal of Dilma Rousseff in Brazil and the political crisis in Venezuela.

Susana Malcorra, currently serving as Argentina’s foreign minister, is understood to have received top-level backing from both the White House and Susan Rice, national security adviser to Barack Obama.

The prospect of an Argentine leading the UN presents Britain with a diplomatic dilemma given the long-running dispute over the Falklands which both Argentina and the UN say must be “decolonised” and returned to Argentina.

President Barack Obama is said to have been won over by arguments in Ms Malcorra’s favour from his Argentine counterpart Mauricio Macri on a visit to Buenos Aires in March that was widely seen as an attempt to re-set US-Argentinian relations.

Britain has been one of the most vociferous of all countries in calling for a woman to head up the UN, for the first time in its 70 year history, but an Argentinian candidacy threatens to expose long-standing disagreements with the US over the Falklands.

The United Nations has since 1964 consistently backed Argentina over the Falklands issue, with its Special Committee on Decolonization once again issuing a resolution last year demanding the UK enter negotiations over the Islands’ sovereignty, a position rejected by Britain.

“The role of UN Secretary General as a very important one, and as a country we believe that the holder of the role will need to understand and apply the Charter of the United Nations,” Michael Poole, the chair of the Legislative Assembly on Port Stanley, told the Telegraph via email


PPK leads Keiko Fujimori 50.4 to 49.6 percent, according to exit poll

Latin America

LIMA, Peru—Peru’s tightly-contested election Sunday pits an ex-president’s daughter against a former Wall Street economist, but whoever wins, the country’s embrace of the free market will likely remain strong.

Both Keiko Fujimori, the 41-year-old daughter of jailed former leader Alberto Fujimori, and Pedro Pablo Kuczynski, a 77-year-old former finance minister and World Bank economist who speaks perfect English, have vowed to retain investment-friendly policies in a country that has become a free-market stalwart in Latin America in the past 15 years.

During the past decade, Peru’s economy has posted some of the highest growth rates in the hemisphere, averaging about 6% a year with inflation at an average of just 2.9% a year, according to the World Bank. That has helped reduce poverty in the country to 22% last year from almost 56% in 2005, the bank says.

Leaked Documents Reveals Venezuela’s Shortages Are Quite Worse Than Previously Expected

Latin America

A new Venezuelan government document, dated Aug. 14, 2015, was leaked to local media sources and published on Sept. 16, according to a report from the PanAm Post. The document reveals that the current shortage rate for most items is at 70%; it also stated that Venezuelans now have absolutely no access to 15 specific food items, 18 personal care items, and eight cleaning products due to the shortages.

The findings were part of a larger study conducted by Venezuela’s Office of the Vice President, and the leaked document indicates that it’s the 19th study conducted by the government to measure its shortages. This is the first time, however, that the media has ever accessed an official government document regarding the country’s shortages; the last time President Maduro’s office released information on Venezuela’s shortages was back in February 2014.

Of the food items measured, the easiest product to find was pasteurized fruit juice (which has a shortage rate of 43%) while the most scarce products are fruit compotes (with a shortage rate of 92%).

As for personal care items and cleaning products, 96% of the stores surveyed did not have baby diapers in stock and 42% lacked toothpaste. Laundry detergent is only missing 67% of the time from store shelves — and it’s actually one of the easier cleaning products to find — while dishwasher soap is only available in 88% of Venezuelan stores.

According to the latest reports (dated July 2015), the average Venezuelan family would have to bring in 8.8 minimum-wage salaries in order to cover the cost of essential items. But with the country’s overall shortage rate at 36.2% this past August, many families can’t even find the items to begin with.

Sharp Devaluation of Argentine Peso

Latin America

Argentina scrapped most of its currency controls and will allow the peso to start trading freely Thursday.

Finance Minister Alfonso Prat-Gay indicated he anticipates the peso could plunge by about 30 percent –which is the gap between the official exchange rate and a parallel rate known as the blue-chip swap– when markets open on Thursday in Buenos Aires.

The move follows promises by President Mauricio Macri to implement reforms in order to increase exports and spur economic growth.

By lifting controls, Macri also hopes to spark a wave of investment in an economy that is battling low foreign reserves and double-digit inflation.

Farmers in Argentina, a grains-exporting powerhouse, have been waiting for the peso to weaken before selling stockpiles of soybeans. Manufacturers have argued for controls to be lifted so they can import crucial parts for production.

Mauricio Macri won the historic ballotage

Latin America

Mauricio Macri won the historic ballotage and is the first head of state from 1916 which belongs neither to the Peronist nor to the Radical Party.

Mr Macri is expected to reverse the national policies of Ms Fernández and her husband Néstor Kirchner (who preceded her as president and died in 2010).

The new president will also improve relations with foreign creditors and with the United States.

After receiving a ceremonial scepter and sash at the Casa Rosada, the country’s presidential palace, Mr. Macri joined his wife, Juliana Awada, 41, in waving to supporters from a balcony. Reprising a frequent feature of his campaign, Mr. Macri danced a solo performance before meeting with foreign dignitaries.

Mr. Macri has vowed to cut inflation to a single digit within two years, though advisers are trying to find way to do so without weakening the economy.

Mauricio Macri, the new President of Argentina

Latin America

Argentina shifts to the right after Mauricio Macri wins presidential runoff

MAURICIO MACRI won Argentina’s second-round runoff election on November 22nd to become the country’s next president. The mayor of the city of Buenos Aires, who ran under the banner of Cambiemos (“Let’s Change”)—a coalition of mostly centrist non-Peronist parties—took 51.4% of the vote. He narrowly defeated Daniel Scioli, the governor of Buenos Aires province, who campaigned as the heir of the outgoing Peronist president, Cristina Fernández de Kirchner.

Venezuela’s opposition activists rally against crime and shortages in the country, in Caracas

Latin America

For a fleeting few years the South American nation of Venezuela and its histrionic late President Hugo Chavez made waves on the global stage. While he upended the country’s economy and exploited class conflict at home, he blamed the world’s woes on the U.S., insulted the American president at the United Nations, and exhorted other leftists in the region to challenge the prevailing economic model and follow his path to “21st century socialism.”

President Nicolas Maduro, Chavez’s hand-picked successor, already warned that if the opposition wins, “very grave things will occur,” saying a “process of confrontation” will be unleashed, vowing he will be first to take to streets to “defend the revolution.”

When opposition candidates started trying to register for the election last week, they discovered that election authorities, loyal to the government, were already barring them from running for office. And the judiciary system will offer no relief.

Brazil businessman Odebrecht charged in corruption scandal

Latin America

The president of Brazil’s construction giant Odebrecht has been charged with corruption and money laundering. Marcelo Odebrecht is accused of paying millions of dollars in bribes to senior officials at the state oil company Petrobras to secure lucrative building contracts. He denies the allegations. Mr Odebrecht is the third-generation heir of a company founded by his grandfather. Twelve other people have been charged with corruption involving Petrobras.  Mr Odebrecht has been under preventive arrest since June.

Illegal detention

His habit of systematically taking notes of everything he did may have turned against him, providing what investigators have considered important evidence, says the BBC’s Julia Carneiro in Rio de Janeiro. The company issued a statement on Friday complaining about the way prosecutors had handled the case. “The allegations presented by the Prosecutor’s Office do not justify the arbitrary and illegal detention of the president of the Odebrecht Group, Marcelo Odebrecht, and four of the company’s executives,” it said. President Dilma Rousseff was head of Petrobras for many years – but she is not implicated in the scandal. Her approval rating have plunged, however, since allegations emerged that senior politicians had benefitted from the corruption scheme.

The investigation began in 2013, but last year it unveiled evidence of a huge corruption scheme at the heart of Petrobras – Brazil’s largest company. The corruption probe is going beyond the oil company. On Tuesday, police carried out arrests and search warrants to investigate a similar scheme within Brazil’s state-controlled electric company Eletrobras.

Source: BBC News

A reflection on Argentine’s import restrictions

Latin America

Currently, Argentina operates a complex foreign exchange control regime. In an effort to substitute imports with national production, government has issued gradually several restrictions for foreign trades.

For all companies operating within the territory, transfers of funds into and out of the country should be made according to Central Bank regulations and restrictions are imposed on inbound and outbound investments, interest payments and any other amounts payable in foreign currency.

This makes international trades quite difficult to be dealed with by local companies,  adding other measures such as requirement for capital reimbursement Central Bank authorization, as do payments for service fees and royalties made to related entities or entities resident in a tax haven.

In January 2015, the World Trade Organization (WTO) declared that the affidavits to import and other trade related measures applied by Argentina were inconsistent with international standards. The conclusion was adopted by the Appellate Body of the multilateral entity in the controversies raised separately by the United States, Japan and the European Union for the implementation by Argentina of the Sworn Advance Import Declarations (DJAI) and other requirements for Trade Related importers (PRC) requirements.

First attempt to eliminate these Declarations was filed by the company IMSA-Kymco, representative in Argentina of the Kymco motorcycle brand which achieved a favorable court’s decisión to import motorcycles and parts without filing the famous Sworn Statements Declarations.

July 2015 was a decisive month for foreign market since agreement was finally reached by the recent WTO court’s decision: Argentine government was obliged to eliminate DJAI (Sworn Advance Import Declarations), and the deadline for compliance was set for 31 December, 2015.

Will this be the end of barriers to imports?

There are various institutional investors awaiting the arrival of the new government which will asume in January 2016 and may bring new foreign trade policies.

By Carlina Cebolla, 

Coordinator-General at Riskma Solutions

July 15th, 2015