Argentina Country Update

• Porteños go to the polls
• Economy keeps growing

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Porteños go to the polls
Kicking off the electoral season, voters in the city of Buenos Aires participated in the first round of mayoral elections on June 3. Outpacing his rivals, businessman Mauricio Macri of the independent PRO party won 45.6 percent of the vote. His closest challenger, Education Minister Daniel Filmus, a close ally of President Nestor Kirchner, secured 23.7 percent of voter support. The incumbent, Jorge Telerman, came in third place. Macri, winner in the first round of the 2003 mayoral elections, swept the polls in all of the city’s 28 voting districts, gaining the support from diverse areas of the city. Since no candidate managed to win 50 percent in the first round, the top two candidates—Macri and Filmus—will compete in a June 24 run-off.

Buenos Aires has benefited from the country’s economic boom.  Over the last few years, the city has witnessed a thriving tourism industry, construction of new buildings and low unemployment.  However, the new mayor will have to deal with the city’s rising crime rates, pollution problems and public transit woes.  With a population more wealthy than the Argentine average and a smaller Peronist base, the capital’s elections are often decidedly local and not particularly representative of the country as a whole.  Nevertheless, the President and his cabinet have tried to “nationalize” the election with the goal of increasing the chances for their preferred candidate, Daniel Filmus.  The day after the election Kirchner accused Macri of representing the unpopular neo-liberal policies of the 1990s and read a list of his votes in Congress against government initiatives.

With presidential elections just four months away, the President has yet to announce whether he plans to run in October. Many analysts speculate that Cristina Kirchner, the President’s wife and senator for Buenos Aires province, may be the Front for Victory party’s candidate. Former Economy Minister Roberto Lavagna, an opposition presidential candidate, has declared his support for Macri, while another candidate, Elisa Carrio, has opted not to back either candidate. 

_{Source: Dirreción General Electoral, Gobierno de la Ciudad Autónoma de Buenos Aires}

Economy keeps growing
Argentina’s economic activity grew 7.6 percent in the first quarter, representing slightly slower growth than expected.  In April, the trade balance narrowed more than projected, decreasing by 18.3 percent when compared to April 2006.  Also, exports expanded 9 percent to a record $4.26 billion, while imports increased by 23 percent to $3.14 billion.

The National Statistics and Censuses Institute (INDEC) announced that a 0.4 percentinflation rate for the past month, a figure lower than market predictions.  The consumer priced index (CPI) grew primarily due to price increases in textiles, transportation, health, and food.  For the first five months of the year, the cumulative CPI is 3.4 percent, a percentage point lower than for the same period in 2006.  Some economists claim inaccurate reporting but the government has defended the figures.

At a record $41 billion, the Central Bank announced this month that Argentine foreign currency reserves have reached their highest level yet.  This accumulation of foreign reserves is aimed to protect the Argentine currency and economy against external shocks.  Another record was also set for the Argentine economy: tax collections are at an historic high.  The tax administration collected $18.8 billion, a 32 percent increase compared to May 2006.

A difficult winter in Argentina has brought energy problems that could have economic implications. Shortages have forced the government to import energy from Brazil and Uruguay as well and cut exports to Chile.  To ensure home supplies, distributors have been forced to shut off or reduce gas supplies to factories.