Argentina: economic and financial difficulties in the background of the election

Affiches de campagne des candidats Sergio Massa et Daniel Scioli, à Buenos Aires le 16 octobre.

Argentines are called to designate Sunday, October 25, the successor to Cristina Fernandez de Kirchner, whose second term as president, under the sign of increasing economic and financial difficulties, coming to an end.
Long absent electoral debates, the economy has recently made his return. The economic and financial difficulties of the country and worsen the outlook is clouded by the Chinese slowdown and declining commodity prices

  • The slump in growth

The second half of the Kirchner years was overshadowed by declining growth, from 8, 7% on average between 2003 and 2007 to less than 4% thereafter. In 2014, the International Monetary Fund talks about recession (-1.7%), while the Argentine economy minister, Axel Kicillof, retains a modest growth of 0.5%. If the dispute persists for 2015 and 2016, no one disputes the importance of the current economic downturn.

Chinese slowdown and falling commodity prices weigh on Argentine agribusiness. Main foreign exchange earner, the latter is also penalized – such as industry, uncompetitive – by the overvalued peso.

  • The foreign exchange reserves nibbled

The coming months will be difficult. Foreign exchange reserves of Argentina, who only has access to capital markets since its sovereign default in 2001, officially fell from $ 52 billion in July 2011 at $ 32.5 billion (29.5 billion euros). But a report by Morgan Stanley, cited October 9 by Emerging Markets rather evaluates to “10-12 billion” .

To obtain foreign currency, the government has increased the “retenciones” these export taxes that reach 35% on soybeans. He limited sometimes banned imports, and rose barter.

  • Heavy deadlines

In early October, the government paid 5, $ 9 billion (€ 5.3 billion) of bonds. There will be as many out in 2016. But the country has no money. Alejandro Vanoli, the governor of the central bank, has completed in Lima, Peru, on the sidelines of meetings of October the IMF and the World Bank a loan of 2 billion with the People’s Bank of China.

  • A very high inflation

High inflation finally complicates the lives of Argentines. The rise in prices accelerated to 12.3% in 2004 and 2005. It would be 25% today. Failing to master by price controls, the government manipulates statistics, ruin the country’s credibility and causes capital flight.

  • The race for dollars

Faced with inflation which dilutes the debts but complicates the lives of Argentines, running the dollar is becoming widespread. There are three to four exchange rate in the country. “The first, aligned to the dollar, is like a star. Dream we are never without access “ quips Mr. Echague Allianz. Other dollars are “blue” traded on a parallel market, which almost storefront at a rate of 16 pesos to $ 1 instead of 10: 1 at the official rate.

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