Boston, MA -- (ReleaseWire) -- 06/11/2014 -- BMI maintains its cautious outlook for the Argentine freight transport sector. A more drastic slowdown than we previously expected in various high frequency indicators have led us to revise down our forecast for Argentine real private consumption and gross fixed capital formation growth in 2014. As a result, our real GDP growth forecast has fallen to 1.2% from 2.2%, and we acknowledge that significant downside risks remain. This forecast implies an even greater slowdown from 3.0% real GDP growth in 2013. The main driver of the slowdown is the impact of the country's January 23 currency devaluation, which sent inflation expectations soaring. As a result consumer confidence has plunged.
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We acknowledge that there are some risks remain to the upside, as an improving business environment and more moderate economic policies could lead to a surge in inbound investment into the country's oil and gas sector. Nevertheless, we caution that on top of its internal economic difficulties, the country is struggling with a considerable infrastructure deficit. Investment is needed across the board if the country's rail freight system is to handle increasing volumes in the coming years.
Headline Industry Data
- Total volume at the Port of Buenos Aires is set to increase by 0.6% in 2014 to reach 11.04mn tonnes.
- Air freight volume is set to grow by 4.2% to 243.5mn tonnes-km in 2014, with average annual growth 4.9% during our forecast period.
- Rail freight hauled in 2014 will grow by a modest 1.8% to 23.6mn tonnes, with average annual growth of 2.9% during our forecast period.
Key Industry Trends
Argentina Proposes Rail Freight Link to Chile
Argentina's Chubut province is investigating the possibility of building a new cargo railway to connect its ports with southern Chile. According to reports, financing for the project may come from Chinese state construction conglomerate CSCEC. Chubut's governor Martin Buzzi has met the head of Chile's state development agency Corfo, Claudio Mosqueira, and CSCEC Latin American representatives to discuss the plan.
Aerolineas Argentinas Adds Four A330-200s
Aerolineas Argentinas has signed a purchase agreement for four A330-200s in an effort to consolidate its wide-bodied fleet. Argentina's flagship carrier will deploy the new A330 on medium- and long-haul routes from its Buenos Aires hub to destinations throughout Latin America, Europe and the USA.
Public-Private Partnership Invests in Port of Buenos Aires
The ports of the province of Buenos Aires will receive USD700mn for public and private infrastructure development and dredging. Provincial officials signed an agreement with the president of the South American Dredging Company for the completion of dredging the port's South Canal Access Port and Dock Sud, totalling USD119.7 mn.
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