Argentina Freight Transport and Shipping Report Q2 2016

Argentina Freight Transport and Shipping Report Q2 2016

BMI View: Argentina's freight transport sector will be negatively impacted by an economic recession in2016, though elevated government spending will prevent growth turning negative across the freight modes.

While currency devaluation will boost the competitiveness of the country's exports, increased costs offoreign goods will dim demand for imports. We expect dynamics across the freight modes will improve inthe medium term as the economy recovers.

Argentina will enter recession in 2016 after experiencing modest real GDP expansion in 2015 as sharpadjustments to economic policies feed through to near-term instability. The new government of MauricioMacri will move to unwind capital controls and the country's longstanding currency peg, leading to a largesell-off of the Argentine peso, and cutting Argentina's spending power given a lack of domestic production.

Such devaluation will boost Argentina's competitiveness Argentina's export products and reignite tradeactivity following contractions in 2014 and 2015. This will encourage growth in the freight sector comparedto a dismal performance in 2015.