Boston, MA -- (SBWIRE) -- 09/18/2012 -- BMI remains concerned about the effects of Argentina's soaring inflation on the country's freight transport sector. We believe that the Argentine government has artificially propped up growth during recent years. Economic growth in Argentina is set to moderate sharply in 2012 to 4.0% from an estimated 8.9% in 2011. Although Argentina's GDP growth remained strong in recent quarters we believe signs that a slowdown in economic activity lies ahead have already started to emerge.

With port workers and others trying to secure pay increases in line with the country's soaring inflation, we expect the threat of strikes at the country's ports to remain a risk. Further threats to the freight transport sector come from the barriers to import that recently re-elected President Cristina Fernandez's administration has been constructing. Despite the country's rich natural resources, it is possible the political and economic situation there could deter investors in the future.

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Headline Industry Data

- Total volume at the Port of Buenos Aires is set to contract 2.2% in 2012 to reach 11.75mn tonnes.
- Air freight volume growth is set to grow by 2% to 170,800 tonnes in 2012, with average annual growth of 1.3% during our forecast period.
- Rail freight hauled in 2012 will grow by a modest 2% to 22.72mn tonnes, with average annual growth of 2% during our forecast period.

Key Industry Trends

Argentina-Paraguay Rail Link Restored

The completion of 29 kilometres of new alignment, enabling trains to once again run between the 1,435mm gauge networks of Argentina and Paraguay, was announced on June 7 2012. The new development will give cargo coming from Argentina access to a freight terminal in the Paraguayan city of Encarnacion.

Barriers To Import Leave Cars Stranded At Port of Zarate

Barriers to import introduced by the Argentine government in an effort to stem the flow of currency out of the country left over 30,000 cars stranded in the customs area of the Argentine port of Zarate in May.

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