The forecast is bullish, given that next year is an electoral year and the economy is still failing to fire up. It is revealing that the once-central financial system is still in crisis. Official figures show that bank credit in July (at US$4.8bn) was 42% lower than for July 2002. In the first seven months of the year, bank lending in pesos was down by 17%. This shows that the banking system is still reeling from the crisis last year when four banks failed and were wound up.
The government argues that the economy has been pulling out of recession since the first quarter of this year. Even the government's supporters acknowledge, however, that the recovery has not created the jobs that the country needs. The government is trying to stimulate the economy by lowering tax rates on industrial investments. This has led to some significant investments in the agricultural sector.
The external part of the economy is already starting to recover. In September, the central bank reported that exports surged by 42%, to US$201m, compared with US$142m in September 2002. Of the September 2003 exports, traditional exports (meat, wool and leather) came to US$51m. Revenues from these products were more than double the September 2002 level. Non-traditional exports, though improving, were up by a more stately 29%. The September export figure was significantly better than the figures for the year as a whole.
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