Dallas, TX -- (SBWire) -- 12/06/2011 --BMI View: Argentina’s infrastructure sector remains dependent to some extent on a US$10bn credit agreement from China. The latest quarter has seen the launch of a third nuclear power plant – a step in the right direction to diversify the country’s power sources. Indec reported that housing construction activity rose by 7.3% year-on-year (y-o-y) in August 2011, growing despite a small 1.8% y-o-y decline in the overall construction activity during the same month. The sector continues to benefit from robust economic activity and should see average yearly growth of around 5% in real terms through to 2015

Key developments in the last quarter included:

Argentina has inaugurated its third nuclear power plant, according to Yahoo. The Atucha II plant was opened by Argentine President Christine Kirchner, who said the plant was a step towards diversifying the country's power production. The 700MW plant is expected to be fully operational by Q312, raising the proportion of Argentina's power production from nuclear to 10%.

Argentina's foreign minister, Hector Timerman, announced the completion of rail upgrade negotiations with Chinese engineering company China Machinery and Equipment, reports the Railway Gazette. The company will undertake a US$2.5bn upgrade of the Belgrano rail network. The contract was expected to be signed in October 2011.

The Argentine government has engaged the services of Canadian energy technology engineering firm Candu Energy Inc. to work on a project to extend the life-span of the Embalse nuclear facility, according to Yahoo! News. Candu is a subsidiary of Canada- based engineering company SNC-Lavalin. Work on the US$1.37bn project will see the plant's operations suspended for around 20 months, beginning in November 2013.

Argentine President Cristina Fernández has received a significant boost to her re-election bid for the 23 October presidential elections.

Early results (and exit polls) from the nation's first unified primary elections suggest the president gathered over 45% of the vote, which if repeated in ten weeks time would allow her to win outright in the first round of the presidential election. While it has long-been our core view that Fernández would win the 2011 presidency her bid received its first test in recent weeks, as the results of provincial elections tested the depth of her support base. Even though the president lost the provinces of Santa Fe and Córdoba, as well as her mayoral candidate for Buenos Aires being beaten by incumbent mayor Mauricio Macri (an increasingly likely candidate for the 2015 presidential election), in our view the national vote casted in the primaries remains the best indication of the electorate's October intentions.

The Argentine economy remains on course for another year of strong economic growth, and we are revising upwards our 2011 growth forecast to 7.0%, from 6.0% previously - slightly lower than the government expectations of 7.5% to 8.0%. With the national statistics agency, INDEC, reporting Q111 growth of 9.9% year-on-year (y-o-y) we believe the main drivers of growth, namely private and public consumption, are set to remain in place at least until the October 2011 presidential election. Given that Fernández has recently declared her candidacy for the upcoming election, and recent polls give her a comfortable margin, we expect her to keep her foot on the fiscal accelerator as she further seeks to expand her support base. This in turn should continue to support real-term expansion over coming quarters, but we believe that ultimately this government-led growth is unsustainable and expect real GDP growth to cool to 4.1% in 2012.

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Releated Report
Iran Infrastructure Report Q4 2011
http://www.marketreportsonline.com/125613-iran-infrastructu.html

Thailand Infrastructure Report Q4 2011
http://www.marketreportsonline.com/125656-thailand-infrastr.html

Australia Infrastructure Report Q4 2010
http://www.marketreportsonline.com/33581-australia-infrast.html

Iran Infrastructure Report Q4 2010
http://www.marketreportsonline.com/33601-iran-infrastructu.html

Argentina Infrastructure Report Q1 2012
http://www.marketreportsonline.com/143326-argentina-infrast.html

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