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Embassy of India Buenos Aires

Bue 101/1/2010 22nd February, 2010

Annual Commercial Report 2009 Argentina, Paraguay and Uruguay

Executive Summary The economy of Argentina withstood the global financial crisis and managed to grow by 0.71% in 2009. The economy is projected to grow by 4% in 2010. Its imports and exports which were down in 2009 due to the global crisis, are set to increase in 2010. The Embassy organized a number of trade promotion events, business seminars and commercial publicity through internet as well as in print and visual media. The Indo-LAC Business Conclave held in Buenos Aires in July and the Second Festival of India in November were amongst the biggest events with huge participation from the Indian as well as Foreign and Argentine delegates. Argentine President Cristina Kirchner visited India in October 2009. This was the first High level bilateral visit in last 15 years. The two governments have set a target of three billion dollars of bilateral trade by 2012. Under an Agreement signed during the visit, the Argentine Government has started giving 5 year multi-entry business visas to India free of cost and allowing stay of 90 days during each visit. This is the best deal any Latin American Country has given to India in relations to Business visas.

The Uruguayan economy grew 1.2% in 2009 and is projected to grow at 5% in 2010.

The Paraguayan economy went down by 3.5% in 2009 but is expected to grow at 4% in 2010.

Bilateral Trade and Economic and Commercial Relations:

Argentine President’s visit to India 14-15 October: This was the first High level bilateral visit in last 15 years. The President was accompanied by her Foreign Minister, Minister of Planning, Minister of Production, Minister of Science and Technology and Governors of the provinces of San Juan and La pampa. A 70 member business delegation also accompanied her. President Cristina gave Business Seminars in Mumbai and Delhi and invited Indian Businessmen to invest in Argentina.

Ten agreements in the fields of Outerspace and Nuclear Energy, Business visa, Science and Technology cooperation, Agriculture and Trade were signed between the two countries.

Some of the various Business Agreements signed amongst the companies of both sides are as follows:

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• Indian Shristhi Group announced the beginning of the construction of a 5-star Hotel & Spa near the Iguazú Falls. This would be the first one of a plan of 50 hotels of that chain throughout the world, with a total investment of US$ 50 M.

• Astilleros Rio Santiago entered into a joint venture with the Shristi group regarding the construction of river barges that would transport to Rosario iron ore extracted in Bolivia (El Mutún) by Jindal. It would imply an investment of US$ 500 in 15 years from 2011.

• Biosidus reached an agreement with the Indian Avanta that involves an investment of US$ 50 M in biotechnology in the next 5 years.

• Argentine TATSA (buses manufacturer, owned by Claudio Cirigliano), and Indian Ashok Leyland signed a technology transfer agreement to manufacture buses in India (with local designs of chassis and bodyworks) and trucks in Argentina, with a total investment from both parties of US$ 24 M. The trucks planned would be 12-ton ones, with 65% of Argentine local parts, expecting to export them to Latin America.

• Indian Pharmaceutical Company Glenmark plans to invest US$ 26 M at Pilar Industrial Park to export oncology drugs.

• The agricultural machinery factory Apache, from Las Parejas (Santa Fe) agreed with the Indian Sonalika Company to sell its products in Argentina and export its equipments for direct sowing.

ONGC singed an MoU with the Argentine Energy Company ENARSA for bilateral cooperation.

Trade Promotion Activities of the Embassy in 2009 The Embassy organized over 20 trade promotion events in 2009 including BSMs and Business Seminars. The major events were: - Textile Exhibition and BSM in collaboration with SRTPEC, AEPC and CEPC – March - Indo-LAC Business Conclave in Buenos Aires in collaboration with CII – 2 July. - Second Festival of India in Argentina, Uruguay and Paraguay – 5-20 November Apart from these the Embassy received CII Delegation to Argentina and Uruguay in June-July, Spice Board and Jute Manufacturing Development Council’s Delegation in August, Chemexcil delegation in September, EPCH and Capexil delegation in November and AEPC delegation to Montevideo in December. The Ambassador gave speeches in Spanish in a number of chambers of commerce and industry on India´s new economic profile and business between India and Latin America. Major Trade Promotion Activities Planned in 2010 - Fashion Show and Textile Exhibition 24-25 March, 2010 - Participation in the International Book Fair of Buenos Aires 21 April-10 May

- Made in India Exhibition in Buenos Aires in collaboration with CII – 18-22 October - Third Festival of India in Argentina, Uruguay and Paraguay – 4-14 November

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Indian Corporate presence in Argentina Representatives from a lot of Indian companies visited Argentina, Uruguay and Paraguay for exploring the possibilities of business in the region. Some of the important ones were Tata Motors and BEML. HCL opened its new IT centre in Buenos Aires. Flatworld Solutions has opened a Centre in Buenos Aires in January 2010. It has started off with 100 staff and has plans to expand. Mahindra tractors were launched in Argentina on 6 March 2009 at the ExpoAgro in Santa Fe province. The local representatives of Mahindra are planning to acquire 10 percent of the local market (8000 per year) in the next three years and eventually assemble them locally here in Argentina. TCS opened its Global Delivery Centre facility with staff strength of 250 in the Technological District of Buenos Aires. The center was inaugurated by TCS CEO Mr. Ramadorai after which he called on Argentine President Cristina Kirchner. Royal Enfield Motorcycles from India have made an entry into the Argentine Market. They have their agents in Cordoba and the first shipment of around 50 bikes has already arrived.

Festival of India: Argentina Uruguay and Paraguay: The Second Festival of India, organized on a bigger scale this year, was a spectacular success and a memorable event. About 50,000 people had attended the various events during the sixteen days of the Festival in four cities (Buenos Aires, Montevideo, Ciudad del Este and Asuncion) in three countries. The Festival included handicrafts exhibition, live demonstration of handicrafts, Bharatanatyam and Dandiya Gujrati folk dance performances, Film Festival, seminars, literary contest, Food Festival, photo exhibition and Incredible India tourism promotion.

Mercosur-India PTA came into force after being ratified by all the member countries of Mercosur on June 1st 2009. The agreement included 450 items for each side on which duty concessions in the range of 10 to 20% have been given. The authorities on both sides are considering the amplification of this agreement to include more products.

Mercosur India PTA-JAC meeting: The first meeting of the Joint Administrative Committee of the preferential trade agreement between India and Mercosur was held in Montevideo on November 23rd 2009. Ambassador Viswanathan attended the meeting on India’s behalf.

Consular Services given by the Embassy: The total number of visas issued in 2008 was 4879 as compared to 4351 in 2008.

Visits to the Embassy website: Between January and December 2009 the number of visits to the Embassy website was 192000 i.e an average of 16000 per month. The figure was highest for the month of November (Festival of India was organized from 5th to 15th November) reaching more than 34500.

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Bilateral Trade: Indian exports to Argentina in 2009 were 342 million USD as compared to 492 million USD in 2008(a decrease of 30%). Indian imports from Argentina were 876 million USD as compared to 836 million USD in 2008 (an increase of 4%).

Items of Exports of India 2009

Items In million US $

Organic chemicals 118

Equipment and machinery 20

Synthetic fibers 16

Sound and image devices 13

Plastics 11

Vehicles and autoparts 11

Garments 10

Pharmaceuticals 9

Dyes 9

Lubricants 8

Argentine Exports to India 2009

Items In million US $

Soybean oil 510

Sunflower oil 53

Sugar 30

Leather 15

Zinc 8

Iron and steel 9

Water pumps 8

Plastics 4

Salt and related minerals 4

Coal 3

Photographic products 3

Steel tubes 3

MACRO-ECONOMY GDP: GDP of Argentina grew by 0.71% in 2008 to reach US$ 328 billion. The growth rate until 2007 was above 8% and in 2008 it fell to 6.5% due to the crisis. Per Capita Income in 2009 was US$ 7655.

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Exchange Rate: Due to Global Financial crisis which started in late 2008, the exchange rate fell from an average of Ps 3.30: US$1 from late 2008 to Ps 3:89: US$1 in early December 2009. Average exchange rate in 2008 was Ps 3.80. Inflation: According to official figures the Average inflation in 2009 was 12% as compared to 9% in 2008. Foreign Reserves: By December 2009 Foreign exchange reserves with the Central Bank of Argentina were US$ 49 billion. Foreign Debt: Government debt in 2009 came down from being 44% of the GDP to 39%. It stood at US$ 128 billion in Dec 2009. Economic Projections for 2010: The economy of Argentina withstood the global financial crisis and managed to grow by 0.71% in 2009. The GDP growth is projected at 4% in 2010. This is yet another evidence of the strengthening macro economic fundamentals and resilience of the Argentine economy. Inflation is projected to be around 12% in 2010 as it was in 2009. Peso is likely to depreciate to 4.2 peso for a dollar in 2010 from 3.8 in 2009. Imports went down drastically in 2009 due to the government restrictions imposed to protect local industries and reduce outflow of foreign exchange in the wake of the global financial crisis. These restrictions are being eased out now and imports will go up in 2010. With the developed countries coming out of the recession, Argentine exports will increase in 2010. Agro-production which declined in 2009 due to drought and political problems will pick up in 2010. INDUSTRY Industrial Sector suffered a contraction of 7.5% in 2009. In the last few months the industry had started showing some signs of recovery as it grew by 3.2% in November December. In 2009 Argentina’s industrial production included :

o 600,000 automobiles o 5.5 million tons of steel o 275,000 tons of aluminium o 1.2 million tons of paper o 2 million tons of sugar o 170,000 tons of PVC o 540,000 tons of polyethylene

Mining: Mining Sector in Argentina is one of the sunrise sectors of the economy due to its abundant natural and technological resources. It was one of the least hit by the International Financial Crisis. The sector’s growth was neutral in 2009 however it received some major investments. Some of them are as follows:

i) Andean Resources, of Australian capitals would make an investment of US$ 200 M to develop Cerro Negro gold and silver project, north of Santa Cruz. They plan to reach an annual production of 300,000 ounces of gold and 3 million oz of silver.

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ii) Barrick Gold confirmed that its Pascua-Lama project is ready for construction. Pascua-Lama's pre-production construction estimate amounts to US$ 3 billion, with expected average annual production of about 750,000 to 800,000 ounces of gold and 35 million ounces of silver in the first full five years. Pascua-Lama, one of the world's last known mega-gold mines, is located about 5,500 meters above sea level, on the Argentine-Chilean border and holds an estimated 17.8 million ounces of gold. It also has one of the world's largest silver deposits. It is one of the lowest cost gold producing mines in the world. Barrick expects the mine to start production at the beginning of 2013.

iii) Australian Troy Resources Company would begin production in Casposo gold and silver mine in Argentina (province of San Juan) in this year. The development would require an investment of approximately US$ 93 M. The mine is located at 2,400 m over sea level and it has gold reserves estimated of about 400,000 ounces. Troy Resources acquired US$ 20 M worth Casposo gold and silver mine located in San Juan, which was owned by the Canadian Intrepid Resources Company. The construction would begin at the end of the year with an investment of more than $ 350 M

Agricultural Production: The Production of Soya (which is the major crop) in Argentina for the year 2009 was around 32 million tons due to the severe drought which had affected the country since last year. The production was 31% less than the production of last year. Also the grain production decreased by 40 % in 2008-09. The production of Corn was 13 million tones. Total area under crops in 2009 was 32 million hectares. Soy, the main crop accounted for 16.6 million hectares in 2009. Wheat was planted in 5.6 million hectares, Maize in 4 million hectares and Sunflower in 2.6 m hectares. Argentine production of food grains and oilseeds went down to 76.4 MT in 2009 from being 94.7 MT in 2008. AGRIBUSINESS Argentine agricultural exports went down to almost US$ 17,000 M in 2009 (-32.4% decrease over the exports of last year). The volume of the exports dropped by 30.4%, to 47 M tons. The main purchaser was China, whose demand reached 5.3 M ton US$ 2,800 M; its purchase was double the 2nd purchaser, the Netherlands. Agricultural exports represented 34% of total Argentine export revenue. Automobile Industry: According to Auto-manufacturers association of Argentina ADEFA in 2009: a) National production amounted to 513,000 vehicles, 14.1% less than the 600,000 of 2008. The leader companies were PSA Peugeot-Citroën (85,445, 16.7% of the total,) GM (81,971) and Fiat (78,573.) b) Domestic Sales (to dealers) amounted to 487,142 units, 20.4% less than in 2008, when 611,770 were sold. 41% of them manufactured in Argentina and 59% imported. c) 322,495 vehicles were exported in the year, 8.1% less than in 2008 (351,092.) Bio-fuel : In 2009 the production of Bio Diesel in Argentina was 1.2 tons of soy oil-based bio-diesel (25% more as compared to last year). This represents around 10% of the world’s supply. 2009 production capacity was 1.2 million tons which is being increased to 1.6 million tons by 2010. Argentina is the third largest exporter of bio-diesel in the world.

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In 10 months of 2009, Argentina exported to the EU around 800,000 ton of biodiesel. Wine: Wine exports which have been increasing in recent years, reaching 900 million dollars in 2009. In 2009 Argentine wine exports grew by 40% IT: It employed about 50,000 people and had a turnover of 2.5 billion dollars in 2009 (a 12.5% increase as compared to 2008) compared to 300 million dollars in 2006 and to over 500 million dollars in 2009. The Argentine software industry´s ambition is to increase turnover to 7 billion dollars by 2016 including exports of one billion dollars and employment to 150,000 people. Argentine Software exports rose to the level of US$ 850 million dollars in 2009.The software Industry constitutes around 1.5% of the GDP of Argentina, a ratio which is the best amongst all the countries of Latin America. Pharmaceuticals: The Argentine pharmaceutical market is valued at 3.5 billion dollars. Foreign companies have a share of 54% of the market while the local companies control 46%. Exports in 2009 were 600 million dollars and the target for 2011 is 800 million dollars.

Foreign Trade: Total Trade of Argentine for the year 2009 was 102 billion USD. Its total global imports in 2009 were 33 billion USD. Imports decreased by 31% as compared to the year 2008 (48 billion USD). Its total global exports in 2009 were 69 billion USD which was 33% less than that of 2008 (89 billion USD).

Composition: Argentina imported almost 31% of its total imports from Brazil in 2009. China exported 13.75 % of the total imports and was close to USA who has 12% share in total imports of Argentina.

Top Ten Imports of Argentina (Jan-Oct 2009)

Argentine Imports 2009

Brazil

China

USA

Germany

Mexico

Rest

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Products US$ in Billion Share (%)

Equipment and machinery 4.5 17

Vehicles and Autoparts 3.9 15

IT and other High Tech products 2.5 8

Petroleum and Minerals 2 7.5

Organic Chemicals 1.4 5

Plastics 1.3 4.7

Pharmaceuticals 1 3.5

Inorganic Chemicals 0.9 3.3

Iron and Steel Products 0.7 2.6

Optical Instruments 0.6 2.2

Argentina exported 18% of its total exports to Brazil in 2009. Chile received 8% of its exported followed by China with 7.4%.

Top Ten Exports of Argentina

Products US$ in Billions Share (%)

Soybean meal 6 10.5

Cereals 5.2 8.5

Crude oil and minerals 5 8

Edible oils 4.8 7.8

Vehicles and Autoparts 4.3 6.5

Oilseeds 3.7 6.5

Meat 2.8 5

Fish and Poultry 1.9 3.3

Equipment and machinery 1.7 3

Fruits 1.5 2.8

Argentine Exports 2009

Brazil

Chile

China

USA

Spain

Rest

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ECONOMIC POLICY MEASURES: All party-multi sectoral dialogue called by the President: The Government after loosing majority in the recent legislative elections called for a dialogue to touch upon political, economic, social and external issues that the country confronts. The president called all the political parties, governments of the provinces, and the industry, trade and agricultural organizations for this national dialogue on the occasion of the Independence Day speech of 9th of July. In addition to this the Economy Ministry proposed to take some initiatives to make the Economic policy making it more transparent and participatory. Some of them included the National Statistical Organization INDEC’s reform, negotiations with the rural sector, creation of the Economic and Social Council and limits to the super-powers of the Government. Changes proposed in INDEC: The government announced structural changes in the official statistical Bureau bringing it directly under the Economy Ministry and creating a control council. INDEC ceased to be headed by the Domestic Trade secretary. It has been a controversial matter since few years. The private and International consultants and financial institutions had been accusing INDEC of not being transparent and of hiding the real inflation and growth figures. An Academic Council was created, headed by the members of Buenos Aires University (UBA) among others, to advice and control INDEC's statistics. An Observation Council was formed by Leaders of the industry, commerce, agrarian producers, so that they can control day by day the statistical results of INDEC. Government-Central Bank Conflict: The latter half of 2009 was marked by a controversy between the Central Bank of Argentina and the Government regarding the intention of the National Government to use of the Forex funds with the Bank for paying a part of the National Debt of the country. The conflict arose when the chief of the Bank Mr Redardo refused to let this happen. The Bank has 48 billion USD worth of reserves out of which the Government wanted to take out 6.5 billion USD to pay the debt. It finally ended with him resigning under the pressure from the Government. The issue was widely reported in National and International Media. POSITION ON INTERNATIONAL AND REGIONAL ECONOMIC ISSUES Argentina became a part of Financial Stability Forum: Argentina joined the Financial Stability Forum in 2009. The invitation to join Financial Stability Forum was important for Argentina. By joining this forum Argentina will be able to consolidate its presence in G 20 and get access to International finance. G-20 Pittsburgh Summit: In this summit, President Cristina called for reforms of the international financial institutions such as IMF and World Bank. She emphasized on the

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need for greater regulation of investment banks. She criticized the protectionist measures of the developed countries against the exports of the developing counties. She welcomed the acceptance of ILO as a participant in the G-20 Summit forum. IMF interested in resuming relationship with Argentina: IMF stated that the International Monetary Fund (IMF) is “ready and willing” to resume its relations with Argentina, even though the IMF hasn’t performed the Article IV review of the national economy since 2006. Mercosur Summit: In the 37th Mercosur summit at Asunción, Paraguay the member countries reached to a number of significant agreements that represented an important step forward for the region's political and economic integration. Argentine President Cristina Fernández speaking at the Mercosur Presidents summit in Asunción requested that the patent rights of the swine flu vaccine be lifted or suspended so that it can be produced in the region. She also mentioned that Argentina and Brazil should produce them given their Pharmaceutical capacity. All the members agreed to work on the elimination of USD in the trade between them. Brazil’s senate finally gave its approval for the entry of Venezuela into Mercosur. With Argentina and Uruguay already having approved of Venezuela the only country left to approve is Paraguay. EXTERNAL ECONOMIC RELATIONS Argentina -Brazil: The bilateral relations between Argentina and Brazil were strained as both sides did put many restrictions on the imports from the other side in order to maintain trade surplus and to protect the local industries. The imports and exports both fell by an average rate of 47% in the beginning of 2009. The two Presidents visited each other in their respective countries many times in 2009 and tried to address the issue. A special commission with the officials of both sides was formed in order to address the differences which were later resolved to a great extent. Some of the major developments in the bilateral relations were: i) Banco Central signed with its Brazilian counterpart a currency “swap” agreement for the equivalent in pesos and real amounting to US$ 1.5 billion, which had been announced in March. ii)A Bilateral Cooperation Mechanism was set up to study deeper economic integration of the two countries. The Mechanism was conceived by the two head of states in their first meeting 2 years back. iii)The Argentine Government also signed an contract with the Brazilian Company Embraer to buy 20 Aeroplanes for Aerolineas Argentinas. Amongst the various agreements signed between the two Governments were the Nuclear cooperation agreement for Medicinal Use, For increasing bilateral tourism and strengthening the Dengue project. Argentina-Venezuela: Both the Presidents made various visits to their respective countries and signed various commercial and economic cooperation agreements. In later 2009 Argentine President visited Venezuela with a business delegation 70 businessmen. Both the Presidents signed bilateral agreements with the aim of increasing economic and commercial exchange between the two countries and of increasing business between private and public sectors of both sides. Venezuela is the 3rd foreign automotive market for Argentina, after Brazil and Mexico.

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Argentina-Pakistan: Pakistani trade Minister Makhdoom Amin Faheem visited Argentina. Mr. Faheem inaugurated “Pakistani 2009 Trade Exhibition”, where different Pakistani companies participated with products majorly in the range of surgical, textile and sports articles. He met the foreign affairs Minister of Argentina and officials from Department of Bilateral Economic Relations. Argentina China: Swap agreement: An agreement has been signed between the Central Bank chiefs of Argentina and China which was later finalized by the two Governments which will allow the two to swap US$10.2 billion worth of their currencies to enable either of them to avoid using dollars in trade between the two nations. It is the first such swap between China and a Latin American country.

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Uruguay Bilateral Trade and Economic and Commercial Relations: Bilateral Trade: Indian exports to Uruguay in 2009 were 47.5 million USD. India exports decreased by 37% as compared to the year 2008 when it stood at 75 million USD. However Indian imports from Uruguay increased by 2 million USD to reach 10.5 million USD in 2009. Major Exports of India 2009

Products In million U$D

Women’s Garments 1.7

Electric products 1.1

Plastic Products 1.1

Vehicles 1

Main Exports of Uruguay 2009

Products In million US $

Wool 5

Leather 1

Wood 1

The Embassy organized the first ever business seminar on 29th June in Montevideo with CII delegation. The seminar and BSM received very encouraging response from Uruguayan business community. The Embassy appointed the President of the Uruguayan Logistic company Grupo Ras(www.gruporas.com ), Mr Ruben Azar as the New Hon Consul in Uruguay. An Indian IT Company Geodesic Ltd acquired a Uruguayan software company Interactive Networks in Montevideo. A Cultural Festival of India was organized for the first time in Uruguay with the help of our Hon Consulate. Classical and Folk Dance shows, Film Festival and Food Festival was organized which received huge response. GDP: Uruguayan economy grew by 1.2% as compared to a growth rate of 8.9% in 2008. The GDP in 2009 was USD 32.6 billion. The per Capita income was USD 9755. Inflation: In 2009 the inflation was 7.2% as compared to 7.8% in 2008. External Debt: Government debt was 12.4 billion dollars in December 2009 which was 38% of the GDP. Forex Reserves: Foreign Exchange Reserves were 8 billion dollars in December 2009. Exchange rate: Uruguayan currency appreciated a little in 2009 as compared to 2008 to average out at 22.63 Uruguayan pesos to one USD as compared to the figure of 24.16 for 2008.

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External Trade: Total Trade of Uruguay in 2009 stood at 11 billion USD. This was less than the figure for 2008 which was 11 billion USD. Brazil 20%, Argentina 19.76% and China with 13.25% accounted for major share of Uruguayan imports followed by USA and Venezuela. Again Brazil received 20.37% of the Uruguayan exports followed by France and Argentina. Outlook for 2010: Growth rate is expected to increase to 5% in 2010 from 1.2% in 2009. Inflation is likely to stay under six percent. The Uruguay Peso is likely to strengthen against the dollar and be around 21 pesos for a dollar. The imports and exports of Uruguay which declined in 2009 due to the global financial crisis are set to increase in 2010. Uruguay has called for international bids for exploration of off-shore oil blocks. The recent massive discoveries in Brazil have also raised the hopes of Uruguay since its coast is an extension of that of Brazil. Main exports are soya, wheat, rice, cotton, wool, meat, leather and paper pulp. Uruguay is the seventh largest exporter of rice in the world. Rice production in 2009 was 1.5 million tons and it is expected to go up to 2 million tons in the next few years. In recent years, soy cultivation has been increasing. Argentine and Brazilian companies are moving into Uruguay to produce soybeans for exports. Area under soy has increased from 29000 hectares in 2002 to 600,000 hectares in 2009. It is projected that in 2010 there would be an increase of agricultural production in Uruguay by 4.1%. Soy production would increase after 33% in 2009). A Finnish company has invested about 2 billion dollars in the Botnia Paper Mill project including in a captive forest of over 100,000 hectares. This is the largest investment in Uruguay. The new paper mill at Botnia (the largest investment) has started producing and exporting paper pulp. This will bring additional export revenue for the country. One more paper mill project is expected to be launched soon. National Presidential Elections: In the elections held in November 2009, Jose Mujica belonging to the ruling party was elected as President. He will assume power in March 2010 for five years. Although he is an ex-Guerilla fighter and was in jail for 14 years as a political prisoner during the military dictatorship, he is committed to continue the moderate and pragmatic policies of the current ruling coalition. The policies will be business-friendly as his predecessor. Paraguay

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Bilateral Trade: Indian exports to Paraguay in 2009 were 50.6 million USD. India exports decreased by 18% as compared to the year 2008 when it stood at 59 million USD. However Indian imports from Paraguay increased by 47% to reach 56.3 million USD in 2009 as compared to 38 million USD in 2008. Major exports of India to Paraguay were Chemicals, pharmaceuticals, tractors, two-wheelers Mahindra vehicles. Main imports of India from Paraguay were Soya oil (94% of imports) and leather. A Cultural Festival of India was organized for the first time in Paraguay with the help of our Hon Consulate. Classical and Folk Dance shows, Film Festival and Food Festival was organized which received huge response. GDP: Paraguayan economy decreased by 3.5% as compared to a growth rate of 5.4% in 2008. The GDP in 2009 was USD 15 billion. Inflation: In 2009 the inflation was 1% as compared to 10% in 2008. External Debt, reserves and Exchange rate: Government debt was 2.2 billion dollars in December 2009. Foreign Exchange Reserves were 3.5 billion dollars in September 2009. Paraguayan currency stood at 4375 Guarani to one USD in December 2009. External Trade: Total Trade of Paraguay in 2009 stood at 8 billion USD. Paraguay exported This was less than the figure for 2008 which was 13.5 billion USD. Paraguayan global imports were 5.5 billion USD and exports were 2.3%. Brazil 23%, Argentina 22% and USA with 20% accounted for major share of Paraguayan imports followed by China and Chile. Again Brazil received 20.37% of the Paraguayan exports followed by France and Argentina. Agriculture: Agricultural sector went down by 15% in 2009 due to the drought and international crisis. Soy production Paraguay in 2009 was between 3 million tons as compared to 6.8 M tons harvested in 2008. Outlook for 2010 Paraguayan economy is set to grow by 3 % in 2010. Better international atmosphere and increasing demand will help the agricultural exports of Paraguay. Embassy will organize a business seminar with engineering delegation in Paraguay in March 2010. This will be the first ever business seminar on India organized by the embassy. Distribution: As per list.

(Eenam Gambhir) Second Secretary