Transcript of a Press Briefing by the Western Hemisphere Department

October 7, 2016


MR. ANSPACH: Good afternoon, buenas tardes, boa tarde, thank you for attending this press conference of the Western Hemisphere department of the IMF on the regional economic outlook for Latin America and the Caribbean. With us to present our latest report, to which you had access under embargo via our online media briefing center, we have the director of the department, Mr. Alejandro Werner. To his left, the deputy director of the same department, Mr. Robert Rennhack, and at the end of the table to the immediate left of Mr. Rennhack, Mr. Nigel Chalk, also a deputy director in the department, and finally to my left Mr. Krishna Srinivasan, from the same department also, a deputy director in the Western Hemisphere department. Before we take your questions, I would like to invite Alejandro to give a few introductory remarks and then we will be able to turn to your questions. Just to remind everyone that this is live and on the record, and we also have colleagues following us online and you can send us your questions via online too. With that, Alejandro, thank you very much.

MR. WERNER: Raphael, thank you very much. Thank you all for being here with us. We’d like to first express our condolences to the victims and the countries affected by Hurricane Matthew, which continues to generate damage in the region. Clearly our genuine, very genuine condolences to all of the citizens of Haiti, this economy once again affected by a very important natural disaster.

Beginning with our conference Raphael said, you have the report before you. What I’d like to do is to underscore a few data before moving on to the Q&A session. As the report says, we foresee that economic activity in Latin America and the Caribbean will reach bottom in 2016, once again, having a contraction however in average terms, of .6 percent. In other words, negative growth of .6 percent for the average growth in the region. And we hope that the economy will recover at a rate of 1.6 percent in the year 2017. As we said in the report, the disappointing results that we’ve been seeing in the last few quarters are indicating potential growth on the midterm that’s lower in the region, obviously, reinforcing the need to adopt the structural reforms agenda to increase investment so as to increase productivity and competitiveness of our economies.

As we’ve seen over the past few years, foreign exchange flexibility has brought important benefits to the region, enabling the region to mitigate the impact of this very important adjustment in terms of external conditions. In the report, we also state that in many cases, the need for a contractive monetary policy is no longer needed because in many of the countries inflation levels are going back to levels consistent with the targets such as in Chile and Columbia with favorable inflation conditions. It’s some of their situations, in one case, it’s reaching its goal situation, whereas the other is halfway to its inflation target. As we’ve mentioned in these meetings before, one of the great advantages of this type of policy with flexible foreign exchange rate enables these countries to have an important countercyclical variable.

Now, with respect to the need to recompose the fiscal spaces in the economies of the region, as we’ve said, all of the economies have a fiscal position that we would call countercyclical, a primary deficit that is higher than what they expect to have on the midterm. And in that sense, our arguments have been more to use the fiscal space in economies that have it to have a speed of adjustment that can be termed gradual, and thus to significantly protect social expenditure, et cetera and eventually return to a sustainable long term fiscal policy.

Some countries have obviously used their fiscal space significantly in the past. They have accumulated higher debt levels, their costs are higher. And in this case, the speed of fiscal consolidation we believe will be faster, a little bit faster.

The document also states that the trends of the international economy on the intermediate term have marginally become more favorable for the region insofar as on the one hand, we have seen first a stabilization of the price of commodity prices and then a slight recover in some and a more significant recovery in the oil area particularly.

We have also seen an additional loosening of financial conditions for emerging markets as of the summer of this year, also generating a situation of loosened financing for the region and perhaps on the negative side, obviously, a weaker recovery of the the economy of the United States.

As we’ve said in the report, all of the factors from the external factors have led to a marginally more favorable environment than what we expected previously. I would like to underscore perhaps the case of two economies that are generating a significant portion of the strength toward negative growth, which is the Brazilian and the Argentine economies. In both cases we are seeing a change in the growth rate for 2017, an important change, growth of .5 percent for Brazil in 2017, which implies a change of almost four percentage points from its negative growth rate of minus 3.3 percent this year, to .5 percent in positive terms next year. And obviously the Argentine economy from a drop of GDP that we’re anticipating of 1.8 percent for this year, to growth of 2.7 percent next year, also a change in growth of 3.5 percent.

And in this vein, this is a significant impulse that will probably come in the last quarter of this year, and that will continue throughout next year for the region. With these growth changes and the economic growth changes for the region in these two very important countries in Latin America after the policies that have been implemented, and that will be -- we’ll see a continuing of the implementation of these policies with a change in the outlook of economic engines with positive effects on their economic activity.

And this in the Caribbean, well we continue to see a slight rebound in the economies that are more oriented toward international tourism and the difficulties for the economies that are tied in to commodities in Central America. We also continue to see a light acceleration of the economic situation as a result of oil prices. Continued impulse consumption and its ties to U.S. consumption has its effect, and this is also affecting financing. And in this case, I would underscore the case of Honduras, that has a program with the international monetary fund and that has had a significant impact. And clearly the cases of high growth in the region, such as the case of Panama and the Dominican Republic that are also following that very dynamic tendency that we’ve seen in previous years. And with this, I would close my comments, underscoring clearly the importance of emphasizing the need to achieve consensus so as to move a structural agenda forward and thus unleash a process of increase in the potential growth of these economies, enabling them to increase productivity, investment, obviously, employment, improving standard of living and progress of the region that we have seen over the past ten years.

MR. ANSPACH: Alejandro, thank you very much. We would begin now with questions and I would give the floor to Paula. You have the floor, can you please use the microphones that we have on either side of the room. Thank you.

QUESTIONER: I wanted to ask about the inflation outlook of Argentina for 2017. News reporters, we often interpret in different ways, the report of the IMF, which has two figures, one of 23 percent and 20.5 percent. Could you please specify or clarify for us what the inflation outlook is for next year for Argentina.

And the second part of my question is Augusto de la Torre of the World Bank said the other day that one of the large questions of economists or international economists of the organizations and Argentina as well, had to do with whether the government of Mauricio Macri was going to have the political credibility or political support to undertake the reforms that you still believe are lacking. So I wanted to ask you about that. Do you agree with that assessment? Thank you.

MR. WERNER: My colleague, Nigel Chalk is in charge of Argentina will be taking these questions. I accompanied the team that completed the mission last week and I believe that in all of the interactions that I undertook at an informal level, I felt clearly a level of understanding of the need to undertake important gradual changes agreed to by consensus with Argentina so as to take that economy onto a path of sustainable growth with social equity and with progress and forward movement in all aspects of social policy. I believe that President Macri and his administration are focusing on the aspect of moving toward a predictable economy, one with sustainable macroeconomic indicators that are predictable, more similar to what we see in the other economies and its economy from the past with the balances and without excessive distortions, but with a clear social dimension, political and social sensitivity and the work to undertake and reach consensus amongst the different social and political actors in the country so as to move forward on the agenda as part of a national project that can be consolidated over time. That is what I perceived during that mission and I hope that that is the case because the mission that is underway in this administration can lead to sustained growth in the country.

MR. CHALK: Let me just one though onto what Alejandro said. I mean I think in terms of political sustainability reforms, I think our view was after the mission was that the adjustment that is now taking place in Argentina was inevitable. The previous path of policies was just not sustainable. And I think you see that most clearly in the poverty data that was released just last week, where one in three Argentines are living in poverty and one in two Argentine kids are living in poverty. It just shows you that the previous model was not a sustainable model, so I think that the adjustment that’s underway, it was inevitable, it was going to happen, and I think it’s being managed in a socially sensitive way.

Just on the inflation outlook, I think we publish two numbers in the WEO. We have the number of 23 percent, earned 23 percent, which is the average for the year as a whole, and a number of around 20 percent, which is the year end number. Now, if you’re thinking in trying to compare that to the Central Bank’s targets of 12 to 17 percent for the year, the 20 percent is the relevant number. So we think that inflation, because of the inertia in the economy and in the wage and price setting, in the Argentine economy, we think it’s going to a somewhat more protracted process to get inflation down and we’re expecting it to be a little bit above the Central Bank’s targets by the end of next year.

MR. WERNER: Perhaps to clarify this concept, the highest figure, the higher figure, is as though you were thinking of the average, the current average of prices in each of the months of the year, so we’re looking at 2016, and we look at the level of pricing which would be the average level for each month vis-à-vis the average of the previous year. The 20 percent, the lower figure, is a comparison of the pricing level from December 2016 versus the pricing level of December 2015. Generally, when central banks speak of their annual inflation, they’re referring to December to December figures.

That is a distinction that I think we were perhaps surprised by the confusion in Argentina because the countries that have upward inflation, it doesn’t change -- rather, those that have downward inflation, it doesn’t change but upward, that is when we could have it see a difference.

So, the difference in these two concepts is that, but generally, all central banks, analysts, et cetera, in all countries work with the December to December figure.

QUESTIONER: I wanted to ask you why in the Mexican economy have we not seen a reflection of the impact of the structural reforms such as those that are underway in Mexico, which are the main recommendation that you continue to make to economies right now?

And a second question that I would have, why hasn’t the Mexican peso benefitted from the focus to emerging markets in the past few months, since August, it is the currency that has most lost weight tied to the elections and the process of the elections in the United States?

MR. WERNER: Before giving the floor to Robert for that question, I would very quickly say that for instance, the energy reforms have had important fiscal effects on the reduction of prices, the improvement of the supply of electric power in the country, and in this vein, I think we see the positive effects, and we have undertaken studies on this last year in terms of the impacts.

In the oil sector, it is important to recognize that these reforms take time because investment in the sector has to come forward, and then obviously, an increase in production, and insofar as these investments are being undertaken and oil production in Mexico has been declining, that is apart from the reforms. It is still happening.

Obviously, it would have happened in a greater intensity had that not happened, had the reforms not happened. That has to be taken into account. In telecommunications, we have also seen an important decline in prices, which will obviously stimulate investment and the capacity to consume of families, but these are things that take time to come forward and to come forward fully.

MR. RENNHACK: To follow up on what Alejandro said, with the structural reforms, it does take time. Energy reform is proceeding. They are auctioning off fields. Obviously, the pace may be a bit slower because of the fall in world oil prices, but certainly the auctions are taking place, and there is more investment in the sector.

Natural gas pipelines, there is an expansion in electricity capacity. We have seen a fall in electricity prices. Telecommunications, same thing. We are seeing increased investment, falling prices.

We always thought this was a process of many, many years, you would never see instant effects. I think the message is still keep at the reforms, keep implementing them, they are all in the right direction. It’s a process of many, many years.

On the value of the peso, yes, it has not rallied as other emerging market currencies have, and there is a link to, you know, the prospect of increased protectionism, and that is weighing on the value of the peso a bit.


Mr. Werner, when you were speaking of economies in crises, I thought you were specifically referring to Brazil and Venezuela. We would like to hear your comments with respect to the Venezuelan economy, if there is still an economy in that country, and a brief reference to Colombia with respect to oil, because oil sales dropped off in the past year, and now through the announcement of new taxes through its tax reform in the country, we are expecting new incomes.

MR. WERNER: Yes. What I said was two economies that are showing negative growth, two large economies. I did not say in crisis.

They are obviously showing negative growth rates, and we do expect them to have positive growth rates next year, Brazil and Argentina, and that is where we have seen announcements and policy changes which in our forecasts lead us to anticipate that next year, the economies will be showing positive growth throughout the year.

In the case of Venezuela, which is the economy of the region which has the largest negative growth rate and economic contraction for the second consecutive year, third consecutive year of economic contraction, the highest inflation in the world, it’s very difficult to visualize the policy changes for 2017, since we don’t have a consultation under Article IV with their authorities.

In this sense, I personally agree with you in that it is an economy that is clearly going through a process of very important decomposition. The humanitarian aspect is of great concern to us in terms of health care coverage for the Venezuelan society, and in this vein, we have been observing the country with a great deal of concern.

MR. RENNHACK: I agree completely with what Alejandro said about Venezuela. It is obviously already in a very serious crisis, the way out is unclear.

In terms of your question about Columbia and the role of oil and impact on fiscal reform, the idea of the fiscal reform is to replace the revenues that were lost because of the fall in oil prices. It is about 3/3.5 points of GDP.

There is that much less revenue coming into the government, and the idea of the reform that will be proposed by the government and considered by Congress is to replace those revenues, to ensure that the fiscal position remains sustainable over a long horizon, and to comply with the fiscal rule, you would be able to have the revenues take the place of the oil revenues, and then you won’t need to contract spending by as much.

MR. ANSPACH: Thank you, Robert. First, I have some questions that we have received online, and then I will come back to the room.

The question is the change in outlook that the IMF made for Brazil for 2017, is this based on expectations or already based on the changes in policies that have taken place in Brazil?

MR. SRINIVASAN: Thank you. What we assume in our forecast for 2017 is a proposed spending cap will be approved by Congress soon, and we also assumed that there will be some kind of pension reform, which makes the spending cap viable.

If these two reforms are passed, then we believe the recent uptick in confidence will gain further momentum, which will in turn catalyze more foreign investment and growth.

MR. ANSPACH: Thank you. Let’s have another question that we received online. It says the public debt of Chile has increased on a sustained basis since 2008. The Ministry of Finance says the public debt will reach 25.6 percent of GDP in 2017, which is the highest level since 1993.Is the IMF concerned about this trajectory for Chile?

MR. WERNER: We are not concerned about that trajectory. We have said so. We think that having established a fiscal framework like Chile’s, plus the commitment and pronouncements made by the government, they have said that gradually they will lower their primary deficit, so as to come up to a medium term level to stabilize the debt product ratio, and it is the correct policy.

As I said, Chile is one of the countries that has the fiscal space because it has -- although its debt has gone up, it has one of the lowest levels of debt in the region. Its credit standing is firm, and it has implemented a fiscal policy that is what we could call countercyclical, and it will buffer the effects of the economic deceleration, and it is in a phase of consolidation. That consolidation will take place gradually, given Chile’s fiscal space.

If they comply with the plans, we have no concerns, and we think it is the appropriate policy.

MR. ANSPACH: Thank you. We are coming back to the room.

QUESTIONER: We have seen that for many years tourism, bananas, sugar and oil, were the main drivers for the economies in the Caribbean countries. After 2008, tourism took a big hit due to the financial crisis, but also sugar and bananas went down.

Could you share your opinion with us on the current situation, what should be the way forward for the Caribbean to realize sustainable growth, and what are the major constraints and challenges that you see? Thank you.

MR. WERNER: It is a very broad question, but I think there are many areas that should be addressed to tackle the growth challenge in the Caribbean. As you mentioned, a region of the world that obviously was heavily based on tourism and primary products, and then it has turned against these factors.

I would not discount any of those factors. Clearly, the Caribbean has a tremendous comparative advantage on tourism, and I think if you look at how the middle classes around the world are increasing -- decreasing the cost of traveling, and the increases, in non-traditional sources of tourism, I think that thinking deeply and thoroughly on how to adjust the tourism proposal of the different Caribbean nations is the way to go to strengthen the supply of tourism services.

I think many Caribbean nations are doing that, are adjusting to that, and are adjusting to the new world, a more competitive world, but also a world in which you have many more tourists searching for different places to go.

How do you shape your tourism product, in which part of the market do you position yourself, but I think there is another important aspect in terms of infrastructure and logistics, and the Caribbean is looking into that as well, and we see different areas in which they are working, to try to solve or minimize the problems of being small economies and the problems of scale.

I think another interesting area in which we have seen interesting plans is in the area of renewable energies, and the whole energy supply. The Caribbean is heavily dependent on fossil fuels, and it is a heavy importer of fossil fuel, and that obviously with high prices of oil will generate a significant negative shock.

Also, we have seen a significant development of projects on the renewal energy side. We also think in the world of services, there is an important opportunity for the Caribbean.

We have seen medical schools being a very interesting source of revenues for the Caribbean, and having youngsters from around the world going to the Caribbean to study. I think those medical service, part time, retirement communities, et cetera, are areas that should be explored, should continue to be pursued.

Obviously, on challenges, we have talked about those, the fiscal challenges that the region faces. In some parts of the region, they have been tackling financial sector issues through restructuring of their banking systems.

Those issues are still there. Governments should continue to work, and obviously in many countries, with or without problems, there have been many successes.

I would like to highlight the case of Jamaica in which they have gone through without any glitch the implementation of the program that they signed with the Fund almost four years ago.

I think it is generating a significant move into a much more financially stable economy, gradual increase in the rate of growth, and I think it is developing much more interest from potential investors in the country, in the traditional sectors, but also are seeing aa very important growth in the services sector, and some interest in development in the non-traditional export sectors in Jamaica as well.

MR. ANSPACH: Thank you. We have a block on the questions on this side. We'll begin with Silvia, but Silvia followed by Alicia and Armando.

QUESTIONER: We heard you and what you said about inflation, and you just came back from Argentina. You were able to see first-hand what the situation is like. The feeling in the country is that money can never be stretched far enough. There is permanent devaluation. So my question is, what is in favor and what is against? What do you think of this against inflation? What is it that stands in the way of winning that that battle.

And second, you talked about the exchange rate in the region. In Argentina we begin to experience pressure on the exchange rate especially on the part of exporting sectors that have cost and inflation in pesos, and when they export, they have the conversion of the dollar, which is low. And perhaps, you realize this first-hand, because you were there. We hear our colleagues here saying that Argentina, in dollar terms, is expensive now. So, I was just wondering, did you experience that first-hand? Was that your impression?

MR. WERNER: I'm the person who went to Argentina, but I think Nigel wants to answer.

MR. CHALK: So, in terms of whether the exchange rate, if it's intensive in dollar terms in Argentina. I think when you have a country that devalued at the beginning of the year, but then has kept the exchange rate broadly stable since that, but you are seeing wages going up 30 or more percent. You are seeing inflation, domestic inflation going up, maybe 40 percent this year. I think it's natural that you'll see the cost of living in Argentina in dollar terms appear expensive, and I think that’s what you are seeing thisyear. It is what we would frame as a real appreciation of the currency is definitely happening in Argentina.

But, you know, at the same time the exchange rate is floating, the Central Bank is being relatively hands-off, and is allowing it to be market determined, which I think will allow it to become more of a shock absorber than it was in the past, when there was attempts to peg the exchange rate --

even in the face of very high inflation.

MR. ANSPACH: All right.

QUESTIONER: The situation of debt of Mexico is more than -- it's 56 percent of the gross public debt, and that has created expectations in the country and also in international markets. Why does the IMF, in its outlook from last week proposed to the Government of Mexico something that was suggested here by the Fiscal Department?

Why did they suggest and independent fiscal council that has been confirmed by the Undersecretary as well as the Secretary, and now they say they do not agree? But, why, if we realize that Mexico is like Chile or if we think it's like Peru where they have independent fiscal councils, and many other countries do too. And it is something interesting. So, I would like to know why. That’s my question. Why?

MR. RENNHACK: We'll agree that, you know, Mexico's public debts around 50, 55 percent of GDP, and it's important to set fiscal policies to bring that down in relation to GDP, and the government's aiming to reduce the public sector borrowing requirements to 2.5 percent of GDP by 2018, and deficit right now is around 3 percent of GDP. So it's really important to continue with the fiscal consolidation, and if there are sort of opportunistic increases in revenue they’ll allow a faster reduction in the deficit it will be a good move.

We've had discussions with the government about the benefits of introducing a Fiscal Council in Mexico, it was in last year's Article IV Consultation. And many, many countries in the world have different types of fiscal councils, Colombia, Peru, Chile, the United Kingdom, the United States has the Congressional Budget Office. And we think it would help enhance the public debate about fiscal policy. There will be more transparency, more analysis of the relationship between the fiscal deficit and other factors in the economy.

So it's our view that, you know, it will be something that would enhance a fiscal framework that the country has. It doesn’t mean that the fiscal framework of Mexico is not working. It is a good framework, it is effective, but we think it can function better with a Fiscal Council.

That was our view, and the Deputy Secretary of Finance said that that was not their view right now, so it's just a topic that’s out there being discussed.

MR. ANSPACH: We are running out of time, so we are going to end up with two questions here, first one from Armando then from Wendy.

QUESTIONER: I wanted to refer to Paraguay, the IMF adjusted its growth projection for 2016-2017, saying that ours was a most dynamic economy, the third-most dynamic in the region; and then the last, Argentina, Brazil are actually seeing a drop in their growth rate. So, what would you say about what our economy is getting right. And also about the structural reform and whether or not we have space, what are the reforms that Paraguay could implement?

MR. WERNER: As we have said previously in the case of Paraguay, it's clear that in Paraguay, very important work has been done to consolidate the macroeconomic conditions, accessing international financial markets, strengthening the banking system that is also working appropriately in terms of providing more and more lending, and also in recent months we have seen that an important boost has been to infrastructure, so all of these elements mean that Paraguay has been able to limit the negative impacts of the economic activity on the parts of its neighbors, that doesn’t mean that the two trade partners couldn’t be doing better, and if they did that would be good news for Paraguay.

But it's clear that Paraguay's economy has been able to generate countercyclical forces that have enabled it to maintain its dynamism. In terms of structural reforms I would say that there are many issues, in Paraguay's economy, and I think that in the short term the emphasis on infrastructure is very important. The emphasis on energy is equally important to allow Paraguay to increase its competitiveness, and returning to energy, the fact that it's a land-locked country.

And because of that, infrastructure is absolutely crucial. Plus, I think that there's an important agenda for Paraguay, and that is to foster inclusive growth and to make certain that the social agenda is part of the government's agenda. And here I'm speaking of education, how so, I think that an important agenda that is still pending, is social inclusion, and that is something the President has also highlighted.

So, the current program of the government is a comprehensive one, it is addressing these points, and from now on, I think it's going to be very important that that program is implemented. Thank you. Wendy?

QUESTIONER: I have several questions. First in your report, you say that Central America should open up fiscal space, and one of the things said is that they need to eliminate exemptions or waivers. How should they begin with that reform? Do you think that there are conditions to eliminate exemptions right now? For example, Nicaragua, private enterprise maintains that many of these exemptions actually create jobs in the country.

Another thing that I would like to ask you about, has to do with a law that is currently before the U.S. Congress, and that bill tries to block Nicaragua's access to funding at the IDB, at The World Bank, at the IMF. The Government of Nicaragua does not -- If Nicaragua does not open up a democratic space, the IMF projects that Nicaragua will continue to grow at one of the highest rates in Latin America next year. And could that build before the U.S. Congress affect that growth trend? Now if we have to create a plan B, what would the IMF recommend?

MR. WERNER: Perhaps my colleague respond to the specific having to do with Nicaragua, and the only thing that I would say is, in terms of fiscal exemptions, our recommendation to the region is obviously that they be eliminated, because they create very important distortions. They produce a misallocation of capital and of other productive resources. And in that connection I would say, that we have divide this issue into two. On one hand, if it's not necessary to strengthen public finances, and if we are looking at exemptions only from a structural standpoint, it would make sense to eliminate the exonerations, the exemptions, and reduce the tax rate.

So we could continue to receive the same revenue, charging lower rates, but those companies that benefited from those exemptions would have a higher tax burden. But the others would also enjoy lower taxes. So, generating employment, economic dynamism would profit because we would be providing the economy with more even stimulus, and consequently, the more productive sectors of the economy would thrive, not those that just profit from those exemptions.

Now, if you are saying that exemptions are maintained, that is not good for the country, those sectors aren’t officially profitable. I'm not saying that that is the case in Nicaragua, I'm just explaining my argument. But if you want sectors to compete for development, you want that to be based on productivity, not on a basis of how good they are getting fiscal exemptions.

So if we keep a level playing field for all sectors that should be good for the economy in general. And what would mean that we would be better distributing the factors of production, according to the intrinsic activity of each sector. I would say that in any economy, there would be conditions to do this.

Obviously, the political environment to create a space for this type of reform depends on each individual country, but from the economic standpoint I think that it would be a very good measure. And it's something that applies not just to Central America, almost the entire region needs to continue to work on this, because the fiscal expenditure, which is basically what these governments are not collecting in terms of taxes, continues to be very large.

MR. SRINIVASAN: . But in general for Central America, this is a region which is doing very well, but different countries face different kinds of fiscal pressures. You know, Costa Rica has some pressures, Nicaragua has some pressures, so when things are looking good, that’s when you build a fiscal buffer. So that’s the emphasis saying, things are looking good, build fiscal buffers at this point, that’s good practice.

On the question about US legislation, we are following that closely, but at this point whatever we say will be very speculative, so let's see what happens, and then we can make a judgment on implications for the country. Thank you.

MR. ANSPACH: We have one final question from Maria, and that will be our last question. Also the last one from Argentina.

QUESTIONER: Good afternoon. I wanted to ask you about investment, the investment numbers for Argentina. The government is making efforts to attract investment, and I was wondering. Do you know whether or not those efforts are paying off? Do you know any concrete numbers? And in what sectors? And my second question has to do with the impact produced by Brazil's growth on Argentina's economy?

MR. CHALK: Okay. So, on investment I mean, it's pointed that Argentina last year was, I think, the lowest investment GDP ratio in the region. It's an economy that’s being driven largely by consumption for the past several years. And so there's a clear need there, there's a big gap in terms of the capital stock, and a clear need for investment to kind of replenish the capital stock that wasn’t done over the past several years.

I think it's a little early for us to make a judgment on the degree at which investment is going to pick up. I think we see it in terms of our forecast, we have a forecast for next year of 2.7, and we definitely see a stronger return of investment as an upside risk to that forecast. Certainly in terms of talking to market participants, and when the mission was in Buenos Aires talking to producers and companies, there's a lot of interest in investing in Argentina. There is a lot of interest in financial flows into Argentina, but right now it's very hard to disseminate how much of that interest is actually translated into real capital formation and investment.

In terms of sectors, I think the agricultural sector seems to be doing quite well, and is attracting investment. I think the domestic recession and also the weakness in growth in Brazil, is probably dissuading from investment in the manufacturing sector at this point. But that will change when the economy starts picking up, and people see more demand there, that will generate its own dynamic to create opportunities for investment.

In terms of the Brazil impact on Argentina, I mean, it's certainly been a drag on the economy the past couple of years. Again, we see the recovery in Brazil and restoration of economic framework in Brazil as upside risk going forward, and I think, you know, we could certainly see a faster recovery in Brazil would feed through into a better outlook particularly for manufacturing system in Argentina.

MR. ANSPACH: Thank you, Nigel. So with that we'll conclude our press conference. Thank you very much. And for any other additional questions, don’t hesitate to contact us, at Thank you very much.

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