Boston, MA -- (ReleaseWire) -- 06/02/2014 -- BMI maintains its cautiously optimistic view on the Argentine port sector. The country enjoys a good commodities mix, but it continues to struggle with external headwinds, as well as internal difficulties in the form of rising inflation and labour unrest. We continue to expect that Argentine real GDP will grow 2.9% in 2014, a considerable slowdown from estimated 2013's 4.9% growth. The January 23 currency devaluation and subsequent collapse in consumer sentiment underpin our view that real growth will slow in 2014. We expect to see a marked slowdown in real private consumption growth this year, forecasting 3.3% real growth in 2014. In part this is due to the effect of higher inflation following the January peso devaluation, which will erode real purchasing power.
Headline Industry Data
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- Total tonnage volume at the Port of Buenos Aires is set to increase by 0.6% in 2014, to reach 11.04mn tonnes. Box handling at the port will rise by 4.5%, to 1.189mn twenty-foot equivalent units (TEUs).
- The Port of Bahia Blanca will see 2.9% growth in volume to 12.89mn tonnes in 2014. Box handling at the port will also grow by 3.8%, to 38.3 TEUs.
Key Industry Trends
Grain Port Delays Due To Lack Of Infrastructure
Estimated soybean production in both Argentina and Brazil increased by 500,000 tonnes to 53.5mmt and 84.5mmt respectively, due to improving soybean conditions in March 2014. Brazilian corn has been hampered by dry weather conditions in the south and southeastern regions of Brazil, while heavy rains have impaired the second-crop corn in Mato Grosso. The Argentinean corn harvest is 7% behind where it was last year, due to torrential rains. Despite the harvesting difficulties in Argentina, expectations are high for the corn crop in 2014, due to favourable weather during growth. BMI notes that the crop is causing port delays throughout Brazil and Argentina due to the lack of adequate infrastructure.
Port of Montevideo Traffic Down 44% due to Restrictions from Argentine Government The Uruguayan port of Montevideo saw a massive drop-off in its throughput from November 2013 on, as the Argentine government placed restrictions on Argentine cargo being transhipped through the port. BMI notes that the port of Montevideo's position close to the mouth of the River Plate estuary makes it an attractive transhipment point for many vessels.
Risks To Outlook
A lack of investment in port infrastructure has resulted in frequent bottlenecks and delays at ports. Argentina has a weak financial system and relatively weak legal and regulatory frameworks. A high level of perceived corruption damages the appeal of doing business in the country, possibly acting as a deterrent to foreign port operators.
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