Sweet and Sour Year End
The year closes with a mix of good and bad data and news. Politically, the government managed to pass its economic agenda through Congress (tax reform, fiscal responsibility, transfer to provinces, social security, financial transaction tax and 2018 budget ), with the support of the traditional Peronists (PJ), who are embracing a more constructive opposition, than the supporters of Sergio Massa (Frente Renovador) and the Kirchnerists. However, during the discussions leading to the approval of the pension reform bill, the government endured harsh and violent street protests which almost succeeded in boycotting the session of Congress.
Activity data continues to show signs of economic recovery, however the external accounts have been deteriorating to new record lows.
Annual core inflation is declining, however the BCRA had to revise its inflation targets upwards for the coming years because its current contractionary monetary policy was no longer tolerated by the economic cabinet. The LEBACs dynamics appeared difficult to maintain.
In this report we review some of these events to shed light as to how the economy starts the year 2018.
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