Argentina Country Risk Report Q1 2016, New Report Launched

Core Views

• A substantial uptick in investment is likely following a devaluation and liberalisation of Argentina's external accounts in 2016. Nonetheless, this will likely not begin until the latter half of 2016, leading to a contraction in real GDP as private consumption declines with real purchasing power. Thereafter, Argentina will enter a period of robust growth as foreign investment flows into the country.
• The government of president-elect Mauricio Macri will move to substantially reduce the country's budget deficit in the coming years by reducing government subsidies on electricity. This will serve to temper inflationary pressures as the government can move away from printing new pesos to finance its substantial deficit. Nonetheless, subsidy reduction will be gradual to limit the shock to consumers' disposable incomes.
• A deal to end Argentina's ongoing technical default will be made by the end of H116 as the Macri government will prioritise the resolution. Without an agreement, the government's access to foreign currency is extremely limited, which would limit the liberalisation of the country's external accounts. Because of this, we view a deal with holdouts as the starting point of potential reform measures.

Major Forecast Changes

We have revised our real GDP growth forecast for 2016 from growth of 2.5% to a decline of 0.4%, taking into account the changes to policy presented by a Macri-led government.

The Argentina Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Argentina. It 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-2019, just published by award-winning forecasters, Publisher  Research.

Key Uses

• Forecast the pace and stability of Argentina's economic and industry growth through end-2019.
• Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
• Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to corporate profitability.
• Contextualise Argentina's country risks against regional peers using Publisher's country comparative Risk Index system.
• Evaluate external threats to doing business in Argentina, including currency volatility, the commodity price boom and protectionist policies.
• The Argentina Country Risk Report by Publisher  Research includes four major sections: Economic Outlook, Political Outlook, Operational Risk and Key Sector Outlook.

Economic Outlook:

How will the Argentina' economic policy-making and performance impact on corporate profitability over 2015-2019?

Publisher provides our fully independent 5-year forecasts for Argentina through end-2019 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 Country Risk Report features Publisher's forecasts with supporting analysis for 2015 through to end-2019, set against government views and Publisher'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.
• Publisher's comprehensive Risk Index 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 obligations).
• Global Assumptions - forecasts for each year to end-2019 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 Publisher's 100% independent forecast scenarios for Argentina and underlying assumptions - we take no advertising and are privately-owned.
• Exploit the benefits of Publisher's comprehensive and reliable macroeconomic database on Argentina, sourced and fully maintained by Publisher 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 Publisher's team of analysts and economists.

Political Outlook:

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

Publisher's Argentina country Risk Index evaluates 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 - Publisher's Risk Index assesses explicit short- and long-term risks to political stability; latest positioning and trends for Argentina's risk are compared with regional and global averages.
• Current Administration and Policy-making Publisher assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.
• Long-Term Political Outlook Publisher examines the structural risks to the stability of Argentina’s political system and the dominant public policy issues likely to affect decision-makers, and outlines scenarios for how the state could evolve in the medium to long term.

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 Publisher's specialist team of analysts and economists, and their network of private and public sector sources.

Operational Risk

What are the current operational risks and difficulties associated with doing business in Argentina?

The Operational Risk section gives an evaluation of current risks and difficulties associated with operating in the market. It also provides a brief overview of the regional Operational Risk Index which benchmarks Argentina against its neighbours.

Operational Risk Contents

The chapter provides a summary of the main threats in the country, within:

• Labour Market Risk (Education; Availability of Labour; and Labour Costs)
• Logistics Risk (Market Size and Utilities; Quality and Extent of the Transport Governance)
• Trade and Investment Risk (Economic Openness; Government Intervention; and Legal Risks)
• Crime and Security Risk (Crime; Terrorism; and Interstate Conflict risks).

The report also drills down in greater depth to address key issues in one of the following segments most critical to the market:

• Transport network, economic openness, cost and availability of labour, crime risks, bureaucratic environment, market size and utilities, and interstate conflict.
• Assess your company’s exposure to country specific operational and business risks, using Publisher’s insight on the current dangers of operating in the market.
• Evaluate Argentina’s risk profile against its regional peers, helping you understand the market’s strengths and weaknesses in relation to other countries.

Key Sector Outlook

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

Publisher 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, including recent sector developments and major industry key performance indicators (KPIs) that have impacted company performance.
• 5-year Industry Forecasts - Forecasts for each year over 2015-2019, using Publisher's proprietary industry modelling technique, which incorporates 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 - Publisher'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.

Spanning over 49 pages “Argentina Country Risk Report Q1 2016” report covers Executive Summary, Political Outlook, Economic Outlook, 10-Year Forecast, Operational Risk, Global Macro Outlook.

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