August 9, 2019
1. Electoral Panorama
Next Sunday, August 11th, Argentina will hold the Simultaneous and Mandatory Open Primaries (PASO), which will whittle down a field of 10 political parties to those who receive a minimum of 1.5% of the total vote in order to compete in general elections on October 27th. The vote will affect both parties running for the executive and legislative branches for government. There’s a lot at stake – in addition to the presidency, 130 of the 257 seats in the Chamber of Deputies, across each electoral district, are up for election, as well as 24 of the 72 Senate seats. President Mauricio Macri (Juntos por el Cambio), closed his primary campaign alongside his running mate Miguel Ángel Pichetto in Vicente López, a neighborhood in Buenos Aires. They were accompanied by Buenos Aires province Governor María Eugenia Vidal and Mayor of Buenos Aires Horacio Rodríguez, who are also both up for reelection. Previously, President Macri held an event in Córdoba and called on citizens to vote for Juntos por el Cambio in the primaries. On the other hand, presidential candidate Alberto Fernández (Frente de Todos) closed his primary campaign in the city of Córdoba. Fernández regularly visited the province of Córdoba knowing it possesses the country’s second largest share of votes following the province of Buenos Aires and the fact that the province was decisive for Mauricio Macri’s victory in 2015. Also, last Wednesday, Fernandez made a massive act in the city of Rosario, along with the vice-presidential candidate Cristina Fernandez de Kirchner, which had not shown for much of the campaign. With respect to Roberto Lavagna (Consenso Federal 2030) and his running mate the governor of Salta, Juan Manuel Urtubey, the two closed their campaign yesterday in Greater Buenos Aires and encouraged voters to vote without fear, hoping to open a path towards becoming a strong third option in the presidential race.
2. U.S. Ambassador to Argentina applauds relations between both countries
U.S. Ambassador to Argentina Edward Prado praised the strength of relations between his country and Argentina after stating the two countries were working together to maximize prosperity, and professing his view that Argentina has potential to exploit and once again become a powerful country with much to offer the world. On the other hand, Brazilian leader Jair Bolsonaro urged his U.S. counterpart Donald Trump to visit Argentina before October’s general elections to back the candidacy of Mauricio Macri, according to Brazilian government sources cited by daily Folha de S.Paulo. On the same token, president Mauricio Macri received U.S. Secretary of Commerce Wilbur Ross last week, where they discussed the possibility of advancing a free trade agreement between the two countries. Secretary Ross had previously visited Brazil, where he met with President Bolsonaro.
3. Argentina achieves trade surplus in first half of 2019, but experiences downfall in industrial activity
According to Argentina’s statistical agency (Indec), industrial activity in June fell 6.9% compared to the same month in 2018, spearheaded by an 11.8% drop in the construction sector. Industrial activity fell 9.4% in the first half of 2019, compared to the second half of the previous year. Indec also reported a 1.8% drop in industrial activity in June compared to May, also highlighted by 4.2% dip in the construction sector over the same time period. With these results in mind, Indec polled business leaders over their expectations for Q3 2019, where 36.3% projected a continued downturn in domestic demand, 20.2% an uptick and 43.5% expecting little to no change. In brighter news, Argentina reached a trade surplus of USD $5.589 billion in the first half of 2019 – with USD $30.752 billion in exports compared to USD $25.163 billion in imports. Exports increased 2.4% compared to the same timeframe last year, while imports tumbled 27.9%.
4. Days away from primary elections, U.S. dollar reaches ARS $46.80
With tensions and trade wars front and center across the globe, the dollar once again experienced a sharp increase compared to the Argentine peso just four days away from primary elections. The exchange rate was only ARS $.10 short of its all-time record, reaching ARS $46.80 to the U.S. dollar. To avoid further raises, the Central Bank bet heavily on the future price of the U.S. dollar and raised interest rates. This time, public banks joined the fray and also increased interest rates based on future prices to satisfy demand. Over the last three and a half weeks, exchange rate instability has once again begun to hit Argentina´s public agenda – the U.S. dollar has advanced 9% on the Argentine peso in this timeframe, which could once again kickstart inflation in the coming days. It is also worth noting that – beyond its domestic implications – the price of the U.S. dollar has been influenced by the U.S. – China trade war and the recent devaluation of the Chinese yuan, which has caused a downturn across nearly all currencies in emerging markets on a global scale.
5. IADB grants Argentina a USD $360 million loan to improve infrastructure and space technology
The Inter-American Development Bank (IADB) will finance road construction and space technology projects in a USD $360 million loan to Argentina, to help boost competition in the production sector and breathe life into domestic industries. In addition to road improvement projects, the IADB granted USD $60 million to Argentina’s PROSAT II project, which develops satellite technology. This operation is a part of the SAOCOM mission, composed of satellites 1A and 1B which will be used to improve satellite imagery for use in the agricultural sector.