Suparna Goswami Bhattacharya

February 2, 2016: Europe had been in the news in 2015, not every time for the right reasons though. Grexit, the Volkswagen scandal, migration crisis, Paris attacks were some of the low points which made economists and investors wonder whether or not to pin their hopes on this continent for 2016.

Though shakiness in the world economy, oil price slump, China’s slow growth did contribute to the sombre mood, not much improvement in the scenario is expected.

Angela Bouzanis, senior economist at FocusEconomics, believes that Europe’s recovery will continue in 2016. “We see Eurozone economy expanding 1.6%, slightly above what we predicted in 2015 (1.5%), amid solid domestic demand and continuation of an accommodative monetary policy,” she says.

Dan Kemp, Chief Investment Officer, EMEA, Morningstar, an investment research and management firm, says that while looking at Europe one needs to separate economic outlook from that of capital markets. “In economic terms, there is clear strength in business and consumer survey data and increased support from domestic demand. These indicate underlying trends remain robust,” says Kemp. However, in capital market terms, much of the good economic news appears to have been already priced into European equities and, consequently, most equity markets look expensive. “The risks appear to be on downside. Opportunities stem mainly from the structure of their capital markets, like their exposure to energy companies,” he said.

Though energy companies have been a drag on returns, the fact is that they are now materially underpriced and, therefore, represent an attractive long-term investment opportunity. “As we create our expected returns at a country and regional level from the bottom up, the value we perceive in these stocks is having a positive impact on our expected returns for those countries with significant exposure to energy companies,” he says.

However, a number of challenges remain, namely the political landscape, persistent high unemployment and very low inflation expectations. In addition, while a weak euro is conducive to export growth, external conditions are not. The emerging market slowdown, particularly in China, and overall pattern of slowing global trade will weigh on growth prospects this year.

Satyajit Das, a former banker and author of Age of Stagnation (published as A Banquet of Consequences in UK, Europe, Australia and NZ), says, “One has to understand that Europe’s tentative recovery was driven by negative short term rates, massive QE, a weaker euro (driven in part by these policies) and low oil prices. But the continent has a deteriorating outlook.”

For instance, German exports to emerging markets are slowing. Exports in August 2015 for Germany were 5.2 per cent lower than July, the sharpest monthly fall since the financial crisis, according to the national statistics office. Germany, which happens to be Europe’s biggest exporter, sends 6.5% of its exports to China, which has been experiencing a slowdown.

“Additionally, the Volkswagen emissions scandal has brought into question much vaunted European technical prowess. European debt problems remain unresolved. In the aftermath of the attacks in Paris, the French government has announced that they will not abide by deficit and debt limits. Italy refuses to bring public finances under control, despite a worsening debt-to-GDP ratio,” says Das.

As far as Greece is concerned, it is likely to be in spotlight this year as well. “Our panel sees Greece’s economy worsening this year, as tough economic reforms and austerity measures are expected to dampen private consumption and stifle the recovery. High unemployment, tax increases and pension reductions will likely push the economy to a 0.7% fall this year,” says Bouzanis

To be honest, Greece’s situation remains in flux. While the current government has been largely compliant with last summer’s bailout agreement, a number of key and controversial reforms still need to be passed. “The government holds a slim three-seat majority and political stability (or willingness to comply with creditor demands) is far from guaranteed. In addition, in the long-run, there is a large risk that this bailout could suffer from the same obstacles as its predecessor: foot-dragging on reforms, poorer than expected economic growth or political upheavals and the question of request of debt relief is yet to be answered,” adds Bouzanis.

Das echoes these views. “The government will find it difficult to meet bailout conditions raising the issue of default, Grexit or both, amidst growing reluctance for further support,” he says.

Greece apart, Portugal too has nothing positive to offer. Its new government, an uneasy coalition of foes, has sworn allegiance to the EU and the euro but is seeking major concessions. “With the highest total debt-to-GDP in the EU, a Portuguese debt restructuring, explicit or de facto, is not unimaginable,” Das says.

Despite positive talks, Spain’s public finances remain poor and unemployment unsustainably high. The recovery remains uneven with excessive reliance on domestic consumption and exports, primarily automobiles, to other European countries. With no clear winner emerging in the 2015 election, Spain remains vulnerable to political instability.

Adding to all these woes is Europe’s refugee crisis. “The current refugee situation in Europe is incredibly complex.  However, it is worth noting that the productive capacity of Europe has increased through the influx of a large number of additional workers,” says Kemp. The key challenge faced by governments is how to quickly integrate these new arrivals and manage the additional strain on the social infrastructure of the countries they settle in.

Das says that though Europe’s refugee crisis may boost economic activity but it is expensive, at around €10,000 per refugee per year initially, putting pressure on weak finances. “It has also highlighted deep divisions within the EU. Serious opposition to immigration and free movement of people required by the Schengen treaty has emerged.”

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January 19, 2016: The importance of Fintech to London can perhaps be seen most clearly through the 44,000 plus people who are employed in the sector — that’s more than Silicon Valley (11,000) or even New York (43,000).

The growth in firms specialising in financial technology innovation has been the buzz of 2015, with the FCA’s Innovation Hub and Tech City setting up residence on the northern fringes of the City of London. London based tech companies raised $1.6bn in the first nine months of 2015, eclipsing the $1.3bn for the total amount raised in 2014. This was boosted by several companies arranging multi-million-pound investments e.g. high-profile deals for Funding Circle, World Remit and TransferWise.

Everyone now realises financial technology disruptors are here to stay, with the FCA’s Project Innovate promoting ‘competition through disruptive innovation’. Disruptors will especially influence the UK banking industry with retail banking already seeing the impact; and slowly but surely, other areas will begin to too in 2016 e.g. trading businesses are looking closely at the potential impact of blockchain. Whereas, traditional financial service businesses e.g. wealth management are seeing Fintech led disruption, driven by tighter regulation and fast-paced customer demand, leaving wealth managers no choice but to invest strategically in innovative technology service partners such as Multrees.

What I also see is a period of consolidation within the industry as hard-headed investors take a longer look at what they hold and where proven value lies. The sector is also receiving more interest from overseas, with potential greater investment from the US, and possibly Japan, on the horizon.

It will therefore be vital that investors and financial services providers alike harness the power of Fintech platforms and technology providers to ensure they have the necessary tools to stay at the forefront of the industry.

Inward investment

In terms of corporate activity, higher levels of M&A are more than likely this year, compared with 2015, as foreign companies are now finding the UK attractive, as property investors have done previously, a bit later and further up the curve. E&Y reported a 90% increase in UK M&A value year on year by value and the number of deals up from 630 to 680.  The fundamentals for 2016 look good too, assisted by cheap debt and increasingly attractive sectors, such as financial technology and investment & wealth management, as well as infrastructure and manufacturing.

In property, 2015 has seen concerted rhetoric and some action from both George Osborne and the Bank of England to cool down parts of the London property market.  This has to be welcomed, though I don’t anticipate we will see a major fall in London property prices in 2016.  International money is still looking for a safe home and London is still an attractive safe haven for investments.

A cooler London property market may, however, encourage the countryside to pick up; especially in areas around Birmingham, Manchester, Leeds, Glasgow and Edinburgh where there is still great value to be seen at a fraction of London prices. For example, brownfield sites in Manchester remain 60% below peak cost levels. I expect the savviest investors will begin to look at these areas in much greater detail if London property continues on with its current growth trajectory.

Interest rates

Finally, right at the end of 2015, we saw some movement with the Fed rate rise announced on December 16. This is good news for investors worldwide even though borrowers will, inevitably, be less cheerful.  As the demographics of our ageing society are not changing – we’re getting older in the UK – we, especially the government, need to see healthier returns on basic pension fund investment products than what has been experienced over the last few years. Hence, I would welcome both a Euro and Sterling rate rise when it comes.

Current UK savers rates are still around 0.5% – 1% – doubling that would be welcomed by the whole investment and pension industry – and borrowing rates would still be ‘low’. All of the above factors point to potential growth for the maturing investment and wealth management sectors, which are currently undergoing a technology and regulatory evolution, pioneered by the likes of Multrees, to enable greater access, lower costs, enhanced transparency, and therefore better investment performance across the industry.

Sir Roger Gifford is a member of Multrees Investor Services Board and former Lord Mayor of London

The post The revolution of Fintech appeared first on International Finance.

IFM Correspondent

December 8, 2015: The International Finance Magazine 2015 Awards were presented to the winners at a glittering ceremony in London on November 27. Trophies and certificates were handed over to the winners at a gala dinner hosted at The Landmark London Hotel.

Peter Meyer, CEO, the Middle East Association (MEA), was the chief guest at the awards ceremony.

The awards were presented by Peter Meyer, Dr. Cigdem Kogar, Chief Representative of Central Bank of Turkey in London; Kofi Addo, Head of Trade and Investment, Ghana High Commission; and Thomas Mbun, Head of Treasury and Finance, Ghana High Commission.

The awards recognise excellence in banking, finance, Islamic finance, insurance, brokerage, CSR and other fields. The aim is to turn the spotlight on people who are making a difference in the industry and nation, and companies that are blazing a trail, with the focus on emerging markets and opportunities.

Meyer had worked in MENA for 15 years before joining the MEA as its CEO. He is familiar with many of the companies and award winners from the region. The MEA is the UK’s leading business forum for promoting trade and investment.

Dr. Kogar, an economic counsellor at the Turkish Embassy, has worked in the research department as an economist in her 25 years at the Central Bank of Turkey. At the awards ceremony, she took the opportunity to interact with the winners.

Attendees were treated to a performance by Dominic Holland, one of the UK’s best and most respected stand-up comedians.

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September 30, 2015: The entire 2015, despite some cautious forecasts of economic development, promises to bring many new opportunities for currency trading. But many are concerned about the unstable situation in the world today. What can we expect in the coming months?

The main trends of the year

Not so long ago, the markets were shaken by the decision of the Swiss National Bank to abandon the peg for franc to euro. The decision led to the closure of many brokerage companies. This situation has shown us the great leaders who nevertheless provided its clients with excellent income and continued to receive prestigious awards even during a crisis. Analysts at FBS company, “The best broker in Asia- Pacific region”, recommend paying close attention in the near future to the leading currency pairs — dollar, euro, pound, yen and franc. In addition, experts say, the world is now seeing the growing importance of the Chinese yuan.

The dollar is not losing ground

China is increasingly using the yuan as a source of payment with its foreign trade partners, and the authorities continue to carry out the gradual liberalisation of the exchange rate regime so that the yuan is included in the IMF’s currency. As a result, in December, the yuan entered the Top 5 most used currency by SWIFT, beating the Canadian and Australian dollars.

It is noteworthy that in the spring of last year, a memorandum was signed in London, on the development of clearing and settlement services in renminbi — City wants to become the leading center trading with yuan outside of Asia. It speaks about the success of the yuan and strengthens the position of the British capital as one of the leading financial centers of the world.

Yen comes to terms with the situation

For a long time the Japanese currency rate weakened against the backdrop of an extremely loose monetary policy pursued by the Japanese leadership. Given this fact, although the Bank of Japan has not achieved its objectives, we can expect the new regulator’s actions to pursue in that direction and a new round of the yen down. Experts at FBS Brokerage Company note that traders can look forward to excellent profits from trading with the yen pairs.

The situation in the world

Geopolitics has great influence on the Forex market — the tension in Ukraine, mutual sanctions Russia and Western countries,and the negative associated with the activities of the Islamic State. Also, let us not forget about the commodity market, first of, about the great importance of oil for the exchange rates. Excess supply caused a sharp fall of oil prices in the second half of 2014 and only in early part of 2015 did the prices manage to stabilise.

Advice for investors

Investments — another way to increase their capital. Leading world experts recommend paying attention to Asia and the Middle East — the most attractive regions in 2015, where there is every opportunity for success.

The Asian region

Today, it is difficult to overestimate the importance of the Asian region in the world. In 2015, Asia will maintain the excellent level by international standards, despite the fact that the year may show low rates of growth. Overall, the currency market is constantly evolving, the number of retail investors has been steadily increasing, and there is every reason to believe that in the coming years this trend will continue.

It is noteworthy, that the development of the economies in South East Asia takes place against the background of a clear decline of economic growth in neighbouring Japan.

Watching the volatility of currencies in Asia, well known brokers, like FBS, are expanding their range of tools available through the introduction of new currency pairs and CFD. For example, the company offers trading in indices of Malaysia — one of the most powerful economies — as well as the index of Hong Kong.

The Middle East

Middle East is a very interesting region for investment, given the wealth of the Muslim world. Saudi Arabia, Qatar and Turkey are the countries who may boast the most for the highest investment attractiveness — conditions continue to improve for businesses and there is an active policy for economic development. The region is very heterogeneous; there are stable areas, suchas the UAE and areas with tension, such as Yemen.

Cooperation with brokers

The possibilities for earning in 2015 are endless. It can be concluded that, since the possibilities for traders depend directly on the proposals of forex companies – a positive picture is formulating. Companies strive to meet all the standards set by the regulators, competition is fair, and services – all profitable. This creates a huge advantage for traders. To recall, FBS company, the experts who provided these forex recommendations in 2015, were awarded “The Best Broker in Asia and the Pacific of 2014” by the International Finance Magazine.

The post Second half of 2015 promises to be exciting appeared first on International Finance.

Jonathan Freeman

April 21, 2015: The Mosaic Enterprise Challenge, generously supported by the Apax Foundation and Nectar Trust, is a fully immersive, business-based annual competition for secondary school students across the UK, designed to develop and encourage their entrepreneurial skills. This year’s challenge has brought out the best in the UK’s young business brains ably supported and encouraged every step of the way by their enthusiastic mentors. The standard every year never ceases to astound the judging panels and 2015 has seen the highest calibre of pitches and concepts so far. I think we can safely say that the bar has been raised to new heights in 2015.

The format is straightforward. Teams of students work with a mentor from their local business community to learn about becoming future business leaders, play an interactive simulation game and come up with first class business ideas that would give the contestants of the BBC’s Dragon’s Den a run for their money!

For the past couple of weeks, I’ve been privileged to witness some real bright young things giving it their all in the Enterprise Challenge regional finals. This not only instils confidence in me about tomorrow’s business leaders but also a sense of pride. We’ve had everything from a baking business that helps internal catering students gain invaluable practical skills whilst also meeting the needs of their school community to a smart system whereby students volunteer to donate spare change from their electronic currency via their school ID cards.

It was fitting that this year’s Enterprise Challenge was launched during Global Entrepreneurship Week. As the world’s largest campaign promoting entrepreneurship, it plays a significant role in encouraging the next generation of entrepreneurs to consider starting up their own business. Mosaic’s Enterprise Challenge shares similar goals and objectives and Global Entrepreneurship Week provided the perfect launchpad for this year’s Challenge.

Since launching this year’s competition, Mosaic has delivered the Enterprise Challenge to 100 schools, involving 4,000 students and supported by a network of 400 dedicated mentors. This was carried out across five key regions of the UK, including London, the South East, West Midlands, the North West and Yorkshire. The five highest scoring schools in each region are then invited to compete in the regional finals throughout March.

The five winning schools this year demonstrated real business acumen, a quality that each of the five esteemed judging panels was looking for. The finalists who go on to proudly represent their regions, are:

London: Skinners Academy from Hackney; North West: Ladybridge High School in Bolton; South East: Langley Academy from Langley in Berkshire; West Midlands: Harborne Academy, Birmingham, and Yorkshire: Spen Valley High School from Liversedge, West Yorkshire.

The Grand Finals take place on April 23, 2015 in London and the winner will receive a superb package which includes £2,500 for their school (£500 of which is for the students to invest in their business idea) together with an unforgettable afternoon with their mentor and a teacher in London in the company of some of the most talented and inspirational figures in British business.

The event — which is also part of Responsible Business Week 2015, a high-profile awareness week, run by Business in the Community — is hosted at the London offices of international law firm Hogan Lovells LLP in London. Responsible Business Week aims to demonstrate the ways in which business can work together with other organisations to deliver a fairer society and more sustainable future

The event will be compered by TV personality and popular broadcaster Natasha Kaplinsky and the judging panel of inspirational entrepreneurs chaired by Claude Littner from The Apprentice.

Mosaic Apax Enterprise Challenge National Final 2014

Last year’s Enterprise Challenge Grand Final was won by St Bede’s Catholic Grammar School in Bradford, West Yorkshire so the pressure is on the students from Spen Valley High School to help Yorkshire retain the title for 2015.Most importantly however, the winning school is supported by Mosaic to develop and launch their business idea with their prize money. We wish all our finalists and their mentors the best of luck for the Grand Final and, as we reach the business end of Enterprise Challenge 2015, our attention turns to the search for outstanding contestants for next year, made possible thanks to the support and guidance of our mentors.

If you would like to help inspire and guide these young adults to help them reach their potential and would like further information about mentoring or any of the Mosaic programmes, please call 020 7566 8734, visit www.mosaicnetwork.co.uk  or email: mosaic@bitc.org.uk

Jonathan Freeman is Managing Director of HRH The Prince of Wales’s charitable mentoring initiative Mosaic (www.mosaicnetwork.co.uk) 

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Leading by example

Economic sustainability? Grow your own entrepreneurs 

Giving back to society

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March 26, 2015: Developing Asia will maintain its strong economic growth in 2015 and 2016 supported by soft commodity prices and recovery in the major industrial economies, says a new Asian Development Bank (ADB) report.

ADB’s flagship annual economic publication, Asian Development Outlook 2015 (ADO), released today, forecasts developing Asia will achieve gross domestic product (GDP) growth of 6.3% in both 2015 and 2016. The region also grew 6.3% in 2014.

“Developing Asia is making a strong contribution to global economic growth,” said ADB Chief Economist Shang-Jin Wei. “Falling commodity prices are creating space for policy makers across the region to cut costly fuel subsidies or initiate other structural reforms. This is a key opportunity to build frameworks that will support more inclusive and sustainable growth in the longer term.”

From the trough of the global financial crisis in 2009, developing Asia has contributed 2.3 percentage points to global GDP growth—nearly 60% of the world’s annual 4.0% pace. Eight economies in the region posted growth exceeding 7.0% in nearly every year of the post-crisis period, including the People’s Republic of China (PRC), the Lao People’s Democratic Republic, and Sri Lanka.

Growth in the United States (US), where recovery seems to have turned a corner, is leading major industrial economies. While signs are mixed in the euro area and Japan, soft oil prices and accommodative monetary policy will support growth. As a group, these economies are forecast to expand by 2.2% in 2015, up 0.6 percentage points from 2014, and 2.4% in 2016.

With improving external demand for the region’s outputs, an expected pickup in India and in most members of the Association of Southeast Asian Nations (ASEAN), could help balance gradual deceleration in the PRC, the region’s largest economy.

Growth slowed in the PRC in 2014 on weak fixed asset investment, particularly in real estate. As the government proceeds with its structural reform agenda, further slowing of investment is expected to diminish growth to 7.2% in 2015 and 7.0% in 2016. This is a much more moderate rate than the average growth of 8.5% in the period since the global financial crisis.

India is forecast to overtake the PRC in terms of growth as the initial phase of government efforts to remove structural bottlenecks is lifting investor confidence. With the support of stronger external demand, India is set to expand by 7.8% in FY2015 (ending 31 March 2016), a sharp rise from 7.4% growth in FY2014. This momentum is expected to build to 8.2% growth in FY2016, aided by expected easing of monetary policy and a pickup in capital expenditure.

Risks to the outlook include possible missteps in the PRC as it adjusts to its new normal, less decisive action on reforms in India than anticipated, potential spillover effects on the global economy of the Greek debt crisis and the deepening recession in the Russian Federation. The impending rise in US interest rates may reverse capital flows to the region, requiring monetary responses to maintain stability. The benefits flowing from the low price of oil could evaporate if geopolitical tensions push it sharply higher.

Across the subregions, economic growth in East Asia will slow to 6.5% in 2015 and 6.3% in 2016 reflecting the moderation in the PRC. The subregion grew 6.6% in 2014. Mongolia will see growth decelerate sharply in 2015 as foreign direct investment dries up and fiscal and monetary policies are tightened. Growth will be stable in Taipei,China, but accelerate in Hong Kong, China, and Republic of Korea, reflecting rising domestic demand and the improving global economy.

Growth in South Asia accelerated to 6.9% in 2014 and is projected to trend higher to 7.2% in 2015 and 7.6% in 2016, reflecting the strong performance anticipated in India. Both Bangladesh and Pakistan are following through with wide-ranging economic reforms that include efforts to overcome power shortages, though political challenges may limit progress in 2015. Sri Lanka’s economy is expected to moderate in 2015 as investors await clarity on the new administration’s plans for governance reform and economic policy.

Southeast Asia is poised for a growth rebound in 2015 after subregional growth fell to 4.4% in 2014. Aggregate growth is seen rebounding to 4.9% in 2015 and 5.3% in 2016 as recovery in Indonesia and Thailand leads the way, and with most of the subregion expected to benefit from rising exports and lower inflation.

Weak oil prices and recession in the Russian Federation pushed subregional growth in Central Asia down 1.5 percentage points to 5.1% in 2014. In 2015 growth will slacken in Kazakhstan, Turkmenistan, and Uzbekistan as lower petroleum exports constrain domestic spending. The weak economy in the Russian Federation will curb export and remittance flows, slowing growth in Armenia, Georgia, the Kyrgyz Republic, and Tajikistan. Average growth in the subregion is forecast at 3.5% in 2015 and 4.5% in 2016.

GDP growth in the Pacific reached 6.1% in 2014, accelerating for the first time in 3 years as natural gas exports began in Papua New Guinea (PNG), the subregion’s largest economy, and expansion picked up in most other economies. In 2015, the first full year of gas production in PNG, growth in the Pacific is expected to peak at 10.7% before falling back to 4.5% in 2016, with only a few economies growing faster than in the previous year.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members – 48 from the region.

Source: Asian Development Bank

The post ADB sees strong growth for Asia in 2015 and 2016 appeared first on International Finance.

Miriam Mannak

February 13, 2015: Up until recently, Africa was a place best avoided. Apart from its natural resources, the continent was deemed pretty much insignificant. This notion has changed fundamentally over the past decade or two. Figures by the United Nations Conference on Trade and Development (Unctad) show that Foreign Direct Investment (FDI) inflows grew from $10 billion in 1999 to $55 billion last year.

Robert Hersov, CEO and founder of Invest Africa, has an explanation for that. “Governance and regulatory frameworks have improved over the past years. In addition, people are no longer taking money out of Africa as more and more Africans are investing in their continent,” he said during the 2015 Mining Inbada conference, which took place in Cape Town, South Africa, from February 9-11. “More and more Africans, who once left the continent, want to come back because of the opportunities. The continent is going into the right direction rapidly. Five years ago, everyone was talking about the BRICS block. Now, everyone is talking about Africa.”

Hersov wasn’t the only optimist attending the Mining Indaba, which is currently the world’s largest mining and investment conference. “Every single day, we speak to investors who want to invest in Africa. The perceptional risk has changed,” said Paolo Scaroni, Deputy Chairman of financial advisory firm Rothschild. “The risk of Africa is not as high as it used to be. There are some challenges, of course. Electricity, for instance. Over half the population in sub-Saharan Africa does not have access to electricity. Without electricity there is no development. This needs to be solved.”

Whilst mining will undoubtedly continue to foster growth across Africa, other industries are expected to gain importance in the near future. “E-Commerce will be one of game changers,” says Ugandan businessman Ashish Thakkar, founder of the Mara Group. This conglomerate comprises financial services, infrastructure, technology and real estate businesses, and has a presence in 24 African countries. “It comes down to having the right products and the right platforms.” Thakkar added that the world can also expect African technological innovations in the future.

AshishThakkar Founder Mara Group

“Everyone keeps talking about brining Silicone Valley to Africa, but the question is how we take Africa to Silicone Valley,” he said, adding that Africa is already producing innovations. One of them is M-pesa, which was developed in Kenya. The mobile currency has since made its way across the continent, providing financial inclusion to millions of people. “Africa is not catching up with the rest of the world. This is our time already!”

Tonye Cole from Nigeria, co-founder of energy conglomerate Sahara Group, is equally positive about Africa as a business destination. “It is the only continent that has something for everyone,” he said. “Anyone can do something in Africa, from an entrepreneurial point of view. This region has produced great entrepreneurs who are doing things we never thought were possible here.”

Also Read

‘Extractive sector can and should benefit human development’

The post Why everyone is talking about Africa appeared first on International Finance.

Kamilia Lahrichi

September 3, 2014: More than one year ahead of Argentina’s general elections in October 2015, six presidential pre-candidates spelled out their political and economic program during Industry Day on September 1 in Buenos Aires.

The Argentine Confederation of Medium-sized Businesses (CAME) organised this one-day event on strategies to boost growth of small and medium-sized enterprises (SMEs). This month, production decreased by 2.8%.

About 750 leaders from 23 provinces and representatives of 345 chambers and federations participated in the forum.

“It is important that the candidates get closer to SMEs, understand their realities and propose solutions to the problems we face,” explained Pedro Casacles, Director of the industry branch at CAME.

These issues “are vital for Argentina’s growth, as SMEs generate 60% of employment and more than 45% of sales,” he said.

Industry Day has been celebrated on September 2 since 1941. It commemorates the country’s first export in 1587.

This event is also the opportunity for Argentines to find out who they will vote for next year.

“For the first time, all the [pre-] candidates are in contact with the citizens and this is very important. This allows us to have a better understanding of what they offer and make better decisions,” said Mariela Galinger, Secretary of the Commercial, Industrial and Farming Center and Services in Argentina.

Anti-populist platforms

Contenders to the Pink House – the presidential office – sharply criticised Argentina’s populist government.

Amid worsening recession, industrial output has slowed and the unemployment rate rose to 7.5% in the second quarter.

Emblematic of the discontent with Cristina Fernandez de Kirchner’s administration, labor unions staged a national strike last week – the second in less than five months – to demand higher wages.

“Politics has to be done in another way,” said Mauricio Macri, head of the government of Buenos Aires and an opposition leader. The government should re-establish people’s trust and focus on “investment rather than spending”, he added.

Mr. Macri also said that the government should better manage the country’s resources.

In particular, inflation and the energy crisis are the two structural problems the Argentine economy faces, explained Sergio Massa, mayor of Tigre and another opposition leader.

An additional bone of contention with the government is the tax burden, which grew to 12% of GDP in recent years, stressed Mr. Massa.

He also lambasted the government’s heavy spending: “60% of public expenditure is spent on the national state and 40% on the provinces whilst 70% of the income goes to the national state and the remaining 30% to the provinces.”

“This imbalance has an impact on the investment capacity and generates imbalances and dependencies that break with the federalism and the stability of the provinces,” he said.

Ernesto Sanz, politician in the social liberal Argentine Radical Civic Union party, argued that “distributing wealth requires having a smart government”. He pointed out that the next government would have to deal with 12 million people living below the poverty line.

Mr. Sanz underscored that Argentina is heading toward “the end of an era,” with which Daniel Scioli, the pro-government pre-candidate, disagreed.

The governor of the Buenos Aires province toned down the opposition leaders’ speeches. “People are not looking for a total change,” he said. “We don’t need a revolution […] in Argentina” to overcome today’s economic difficulties, he added.

Courting SMEs

All candidates wooed business leaders by promoting market-friendly policies.

Julio Cobos, a former vice-president of President Fernandez de Kirchner, stressed the need to boost production, create jobs and reduce public spending.

He said that inflation could reach 18 percent in 2015 and then decrease to a single-digit number.

Argentina needs at least three years to control inflation, added Hermes Binner, leader of a political coalition. All sectors need to participate in the economy to overcome the current economic problems, he said.

Mr. Binner, who came second in the 2011 presidential election, said that the country must think about “the industrialisation of primary products to increase value added”.

Elisa Carrio, founder of the social liberal Civic Coalition ARI, called for revising Argentina’s import substitution policy, which hamstrings international trade.

On August 22, the World Trade Organization ruled that the South American country’s import restrictions breached global trade rules.

Ms. Carrio referred to Argentina’s first immigrants who started their businesses “with credit and hard work”. “Argentina needs to come back to that,” she said.

In addition, Mr. Sanz called for an end to “the assistance culture that leaves behind the work culture.” He referred to the tax system that makes Argentines pay taxes at the customs, in banks and in supermarkets.

Faithful to the government, Mr. Scioli railed against his rivals, saying that: “These are the ones who want to govern for a few, for the rich, those who promote fixing duties at zero on soybean and not explaining how they will sustain the social security system in Argentina.”

“Do not vote for the narco-state”

Known for being outspoken, Ms. Carrio called corrupted government officials “mobsters”. She argued that candidates are “liars” because “they answer to those who finance their political campaign”, making the audience laugh.

“I want to clean the state and the customs,” she said.

“I have a lot of sympathy for Elisa Carrio. I like very much [the fact] she says the truth that many do not dare to say. I would like her to ally with Macri,” said Ms. Galinger, a participant.

“I don’t mind if there is just one woman [pre-] candidate because there are a lot of women in politics [in Argentina],” said Marcela Padula, Coordinator at the Merchants, industrialists and professionals association.

Endorsement?

“These speeches are obviously political campaign speeches so we have to be careful,” explained Ms. Padula.

“[Yet,] what I liked is the attitude to solve problems – whether it works out or not –regarding employment and productivity,” she said.

Government officials who participated in the CAME event disapproved of the criticism of the administration.

“Those candidates are from the opposition and it is very easy to have a critical discourse without any projects,” said Juan Bias Taladrid, Undersecretary of Industry and Trade of the government of Mar del Plata, in the south of Buenos Aires.

“I am a civil servant. So, obviously the one who shared my position is Daniel Scioli. Of all the candidates, he is the one who has the best management skills and he is in charge of the largest province [the Buenos Aires province],” he said.

“I think that Daniel Scioli brings together the characteristics of the person that has to lead our country. [He is] a person of reason, dialogue and he bridges all the sectors,” said Ricardo A. Lopez Ruiz, General Director of Institutional Development for the government in Corrientes, a province in the north of the country.

Nonetheless, the majority of business leaders endorsed opposition leaders’ platforms.

“I liked very much the speeches of [Mauricio] Macri and Ernesto Sanz because they were very broad and realistic: [they spoke about] the reality of our country,” said Carlina E. Dorado, an entrepreneur.

“Macri […] wants a different, nicer and clean country with growth and development: this is what I liked the most about his speech,” she added.

Mr. Macri is known as an ally of the farming sector, which is why he has garnered support of wine producers.

“He understands best topics related to the regional economy. He gave the broadest [economic] panorama at the micro and macro levels,” said Jose Alejandro Pons, a wine producer.

Small pool of voters

Despite an apparent consensus amongst business leaders, they do not have the last word on the 2015 presidential election.

“We need to wait until next year’s election to see [who will be the next president],” said Basilio Nykolyn, Director of the industry of the Chaco province, which ranks last by GDP per capita of all provinces.

The populist administration of President Fernandez de Kirchner has seduced many Argentines with socialist policies like loans to poor families.

“Businesspeople do not form the majority. The thing is that the government’s social plans guarantee an important quantity of voters. This is unfortunate,” he added, whispering.

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