7/5/2017 Nº 891 MAIN NEWS Can Cristina win? Asked a journalist, echoing the cor- POLITICAL and ECONOMIC DIRECTION .......................... 2 porate sector concerns. Analysts are certain that her ARGENTINA’S ECONOMY ............................................... 3 “return” is due to the need to obtain legal privileges by MEASURES and ANNOUNCEMENTS ............................... 4 being a Congress member. However, in the first poll, POLITICAL NEWS............................................................ 6 Cristina and Esteban Bullrich are practically even for JUSTICE.......................................................................... 7 the Buenos Aires Province Senate election [“Economic AGRICULTURE and AGRIBUSINESS ................................. 7 and Political Direction”; “Other political…”]. FOOD and BEVERAGES ................................................... 8 TEXTILES AND APPAREL ................................................. 8 Paolo Rocca warned about the risk of excessively LABORATORIES .............................................................. 8 opening the economy [“Economic and Political Direc- MINING ......................................................................... 8 tion”]. IRON and STEEL ............................................................. 9 AUTOMOTIVE INDUSTRY ............................................... 9 Orlando Ferreres said that "Everything is going slightly OTHER INDUSTRIES ........................................................ 9 better, except consumption and some activities relat- INFRASTRUCTURE and PUBLIC WORKS .......................... 9 ed with Brazil”. Ferreres calculated a 4% year-on-year ENERGY ....................................................................... 10 GDP increase for April – and predicted that June, July, TRANSPORTATION and LOGISTICS ............................... 10 and August will be better [“Economy”]. REAL ESTATE ................................................................ 11 TELECOMMUNICATIONS.............................................. 11 Also, according to the INDEC and FIEL, industrial pro- INFORMATION TECHNOLOGY and INTERNET ............... 11 duction for last May increased 2.7% and 4.3% year-on- INSURANCE ................................................................. 12 year, respectively. Construction activity increased, last BANKS and FINANCING ................................................ 12 May, 10.3% year-on-year, INDEC informed CAPITAL MARKETS ....................................................... 12 [“Economy”]. FOREIGN TRADE AND INVESTMENTS ........................... 13 MISCELLANEOUS ......................................................... 13 “Deep reforms are prepared for after the elections.” MERCOSUR and UNASUR ............................................. 15 There are also assumptions that there will be an ample BRAZIL ......................................................................... 15 convoking to carry out structural agreements CHILE ........................................................................... 16 [“Measures and announcements”]. URUGUAY .................................................................... 16 VENEZUELA.................................................................. 16 In about three months, Argentina and Chile could sign COLOMBIA .................................................................. 16 a trade liberalization agreement [“Measures and an- nouncements”]. Important businesses The business news this week is the merger agreed between Telecom Argentina and Cablevisión, which would create the largest Argentine Company, offering four-play service, and competing with Telefónica and Claro [“Telecommunications”]. Last week wheat international prices increased 11%; those of soy and corn increased more than 4% [“Agriculture”]. Sao Paulo Alpargatas company, owner of Alpargatas Argentina, was acquired to the Batista family by an investment fund [“Textiles”]. Finally, Odebrecht will give up its share in the consortium in charge of the Sarmiento Railroad undergrounding project. The participation will be transferred to its current partner, Italian Ghella, which will be in charge of the project accom- panied by IECSA (now called “SACDE”). Also their Spanish partner COMSA was left with a minimum participation (1%). 6/27 to 7/3/2017 Nº 891 Page 1 from 16 It was later informed by the Interior Ministry that it preventively suspended Odebrecht for 12 months from competing in bid tenders for new public works in the country. [“Infrastructure”]. Aluar will start the installation of its own wind park (510 MW), close to its Puerto Madryn aluminum refinery, which will demand an investment amounting to US$ 815 M [“Energy”]. “Flybondi” received the authorization to cover 43 domestic routes and 42 international, during 15 years, anda an- nounced investments for US$ 75 million. [“Transportation”]. Telefónica is closing down its news Terra portal [“Internet”]. The dollar reached a $ 17.18 quotation (official retail forex) and $ 16.94 (wholesale) yesterday. A firm portfolio dollarization process and less agriculture exporters’ liquidations continuing boosting the dollar’s local price to record levels and a significant peso devaluation. The government downplays the effects of this movement, but if represents a relief for all exporters. On the other hand, it would unleash price increases in many goods and services [“Capital Markets”]. “Argentina is only competitive as far as agriculture is concerned: it exports the same quantity than in 2010. On the other hand, the industrial manufactures exports have receded US$ 7,000 M since then.”[“Foreign Trade”]. In “Brazil,” the Treasury Minister lowered growth perspectives for 2017 below 0.5%. CONTEXT POLITICAL and ECONOMIC DIRECTION 1) “The questions and fears among businessperson are repeated all over: Can Cristina win the Legislative elections? How will Macri govern and improve the economy if the official party did not have a good election in October, and the opposition starts a radical movement? Should we continue with peso Lebacs, and fixed termed accounts, or should we start buying dol- lars?” “The best political analysts coincide in their opinion that, today, nobody knows what will happen. But PASO primary elec- tions are on August 14th, which are obligatory, will let us know how the electoral run is going. It will be seen whether every- thing is a disaster – as the opposition says, as well as audio visual media – or if the people are hopeful and will continue vot- ing the Government and supposedly against the past, rejecting populism and Cristina’s State power and her political sector – increasingly extreme. Only two years ago, Scioli obtained 37% of the votes, Macri 34%, and Massa 22%. The official party supposes that Cristina’s discredit, due to the corruption scandals, would increase lack of support, although this should be contrasted with economic hardship suffered by the middle low and low classes in the Greater BA area, which Cristina is targeting.” (Willy Kohan, Cronista, 6/29.) 2) Businesspersons warn about the risk of excessively opening the economy. (Clarín, 7/1.) "No government can go ahead with an undiscriminate opening without risking governance and consensus,” as- sured Paolo Rocca (Techint Group CEO) during a corporate panel of the 20th Annual Meeting of the Companies Direc- tives Christian Association (ACDE). Rocca and Hugo Siman (INSUD Group president), coincided on the need that the Government policies give more pro- tection for national industry, even if it results in a higher deficit,” and not to open imports indiscriminately.” (La Prensa, 7/1.) 6/27 to 7/3/2017 Nº 891 Page 2 from 16 Rocca also said that, for the companies, the challenge is to be able to read this, and support the Government to govern in the midst of so much volatility… I personally believe that we are heading towards a de-globalization of our value chains… In the last 25 years, we went through two large "macro-tendencies," which generated great global unevenness: China’s advance – which went to produce 4% to 28% of global manufactures - and An accelerated technological advance. (Nación, 7/1.) 3) Hugo Sigman said that the technological advance is an opportunity, and asked for more subsidies for scientific investiga- tion and development. (Infobae.com, 7/1.) ARGENTINA’S ECONOMY 1) Industrial Activity. (I) According to FIEL, industrial production for last May increased 4.3% year-on-year. It is a monthly improvement of 0.7% seasonally corrected vs. April (+6.1% non-seasonally corrected). As for the 5-months accumulated, it is a 1% fall vs. the same period last year (preliminary fig- ures). Thus, the recovery – going on its 8th month – reached an increase equivalent to 5.8% annual; it is expected that, in June, these figures will consolidate. (Fiel, 6/28.) In the accumulated for the year, the non-metallic min- erals production (4.6%) heads the increase; iron and steel grew 1.7%. All the other sectors show falls: among them, textiles (‐2.2%), food and beverages (‐2.5%), crude oil processing (‐3.2%), and the automo- tive industry (-5.2%). FIEL’s Industrial Production Index Series chart about Indus- trial Production, January 1993-May 2017, showing recession (gray lines) and expansion periods, and turning points. > 2) Industrial Production. (II) INDEC official estimation is Variations the most conservative of the three that were informed MAY 2017 Compa- Year-on- Monthly, Accum. in 5 (see comparison chart). This increase broke down