Economy and Finance

The Uncertainty Country Risk Index has been elaborated in a quarterly frequency since 1984 over the base of 152 variables grouped in political, social, economic (internal and external) factors and of the state of Argentina’s international relations.

It is a valuable tool to capture the systematic risk of Argentina’s economy and to identify the main uncertainty points. Including variables of different types gives way to reaching a more complete vision than the indexes build only from financial variables.

Since its coming into effect in December 1984, it has proven its efficiency to anticipate adverse and favorable scenarios. For instance, during Menem’s second government and from De la Rua taking office. Also in the opportunities arisen with the coming into force of the Exchangeability plan and from 2002 with the Regularization and Stabilization plan.

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The Financial Risk Index of Ecolatina was created with the view of measuring the credit risk of the Argentine national government implicit in the return spread of the regular binding debt.

This index is a daily indicator built on the performance and market capitalization of certain debt titles issued by the National State, denominated in pesos and dollars.

Taking into consideration that the historical values of this index have been available on a daily frequency since the 25th September 2002, it is the only reference index of financial risk during the post-default period of the public debt until mid 2005, when the restructuring was completed.

The IRFE is an effective tool to grasp the impact of international and local financial context changes over Argentine capital markets in general and, in particular, over bonds.

Real investment decisions necessarily require foreseeing medium and long term business context. Through the INVEX, Ecolatina developed a leading index with the objective of having a tool of early warning in face of changes in the investment expectations.

The Investment Expectations Index is the first leading indicator of Argentine investment. It is a monthly index that incorporates monetary, financial, economic activity, external and fiscal sector variables and it was developed over the base of a dynamic weights structure. This particularity optimizes its capacity to foresee the evolution in investment even when sudden changes take place in the fundamentals of each economic model.

Through the INVEX the probability of a change in investment trend is also determined in advance. These elements allowed for the alert at the end of 1997 of the beginning of a contractive phase in investment that was effectively registered in March 1998. The INVEX also foresaw in January 2002 the beginning of an investment recuperation phase that only started being noticed in the national accounts in September 2002.

Precedents...