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09BUENOSAIRES1318 2009-12-04 14:35:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Buenos Aires
Cable title:  

Argentina Economic and Financial Review, November

Tags:   EFIN ECON EINV ETRD ELAB EAIR AR 
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1. (U) Provided below is Embassy Buenos Aires' Economic and
Financial Review covering the period November 26 - December 3,


2009. The unclassified email version of this report includes
tables and charts tracking Argentine economic developments.
Contact Econ OMS Megan Walton at WaltonM@state.gov to be included
on the email distribution list. This document is sensitive but
unclassified. It should not be disseminated outside of USG
channels or in any public forum without the written concurrence of
the originator. It should not be posted on the internet.





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November Tax Revenue jumped 20% y-o-y to ARP 26 billion



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2. (SBU) On December 2, President Cristina Fernandez de Kirchner
announced that preliminary figures show that November tax
collections increased 20% y-o-y to ARP 26 billion. This result is
much stronger than the increases of less than 10% in each of the
past three months and in line with market estimates. The President
stated that "we are returning to double digit rate increases" in
revenue, stressing that the improvement (in collection) is a direct
result of recent GoA measures to jumpstart the economy. The Tax
Authority plans to issue detailed tax revenue data on December 3.





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October Trade Surplus improves to $1.2 billion as exports decline
but imports plummet



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3. (SBU) On November 20, the National Bureau of Statistics (INDEC)
announced that the October trade surplus reached $1.2 billion,
higher than the $1.0 billion expected by private analysts and the
$1.0 billion achieved in October of 2009. While exports declined
21% y-o-y to $4.8 billion, their decline has decelerated compared
to the previous three months when they dropped 34% on average.
Imports remained depressed, dropping 29% y-o-y to $3.6 billion
(close to the September 2009 figure). The y-o-y decline in imports
reflects weak domestic activity, new trade restrictions, and the
impact of a weaker peso. In October, export volume declined by 8%
y-o-y, while export prices dropped 14% y-o-y. On the other hand,
the 29% decline in imports was driven by an 18% decline in volumes
and a 13% drop in prices. Exports of primary goods declined 54%
y-o-y, with quantities exported down 41% y-o-y (affected by a very
high basis of comparison) and prices down 21% y-o-y. Exports of
industrial goods declined 12% y-o-y while exports of manufacturing
goods of primary origin dropped 16% y-o-y. In the first ten months
of the year, the trade surplus rose to $14.4 billion from $11.2
billion in the same period last year (up 29%), reflecting a 25%
drop in exports that was more than offset by a 37% drop in imports.
The trade surplus is expected to close the year at around $16
billion, according to private estimates.





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Wages keep increasing as October's wage index rose 1.60% m-o-m



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4. (SBU) INDEC announced December 1 that the wage index increased
1.60% m-o-m in October. This figure exceeded expectations of
1.30%, as measured by a survey conducted by the BCRA. However, the

BUENOS AIR 00001318 002 OF 002


October figure represents a slight deceleration from September's
increase of 1.70% m-o-m. The survey indicated that private and
public sector salaries rose 1.89% and 3.28%, respectively, while
private informal wages decreased 1.15%. The cumulative increase of
the index in the first ten months of the year was 14.4%. The BCRA
survey forecasts an overall 15.9% increase in the wage index for
2009, and 14.5% for 2010, compared to the previous month's forecast
of increases of 15% and 13%, respectively. These results indicate
an accelerating wage growth trend for the upcoming period. In
tandem, private sector analysts are revising upwards their
inflation estimates for next year to 17- 20%. [Note: This index
defines wages as a price, without considering hours worked or
special payments for productivity gains.]





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November labor demand index down 3% m-o-m



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5. (SBU) The November labor demand index calculated by Di Tella
University decreased 3% m-o-m to 47.7 points, far below the 110
peak reached in February 2008, when it started its decline. The
index is currently 44% below its historic average of 85.2. So far
this year, the index has decreased cumulatively by 22%. According
to Di Tella University, in spite of the negative trend of the index
so far this year, the negative growth rate has decelerated. Di
Tella forecasts a more positive labor market outlook for 2010, with
the trend expected to turn positive in the first quarter and the
index to continue to move upward through the second half of 2010.
[The Di Tella index is based on comparisons of job vacancy
announcements printed in the two largest newspapers of the
country.]





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Gold/silver mine project to begin after eight-year delay



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6. (SBU) The Pascua Lama open pit mining project, reputed to be
the first binational mining project in South America, was finally
approved by the Argentine and Chilean governments after eight years
of legal disputes and delays. The environmental review took a very
long time, with local authorities imposing over 400 conditions on
Toronto-based Barrick Gold, a leading mining company, which first
began participation in the project in the nineties. Operations
will now begin, with the development of the mine expected to be
completed by the end of 2012. Pascua Lama's annual output, which
includes production in both Chile and Argentina (75% in Chile) is
projected at 750,000 ounces of gold and 35 million ounces of silver
during the first five years of operation. The mine is located on
the frontier between Huasco (Chilean side) and San Juan (Argentine
side), at an altitude of over 4,500 meters. Its development will
require an estimated total investment of USD 3 billion.
MARTINEZ