Argentina tries to export a way out of the economic crisis
Argentina’s government is sticking to the widely condemned claim that exports can be doubled over the next five years, despite the economic downturn and the suspension of one of the main exports last month. beef..
Argentina is one of the countries most affected by the coronavirus, which exacerbated the economic crisis that began three years ago. Inflation turns 49% IMF investors are worried about a deadlock on the repayment of a loan of 44 billion dollars.
Yet Production Minister Matthias Kurfas says the economy is just around the corner.
“This is an important time when many investments have matured and allowed a significant jump in exports,” Kulfas told the Financial Times.
Kulfas says new projects in sectors such as mining, energy, manufacturing and auto could double exports by around $ 65 billion over the next five years.
Private economists and analysts dismiss the prediction as overly optimistic. The IMF forecasts growth of 5.8% this year, with agricultural powers benefiting from soaring commodity prices, but the economy shrank 10% last year. It is far from having returned to the state before the pandemic.
Mr Kurfasu cited an investment announcement worth around $ 20 billion since President Alberto Fernandez came to power in December 2019. He said the country’s fast-growing knowledge economy Argentina is expected to bring in an additional $ 4 billion over the next few years, while new mining projects alone may add around $ 12 billion to exports. ..
“In reality, there are possibilities and there are international demands. It is reality. Next, let’s see how successful we are. [ensuring that all these projects] “Make sure you move on,” Kulfas said, stressing that it also depends heavily on how fast the project is progressing.
Many agree that the clearest way to ensure sustainable economic growth in a country lacking in foreign exchange is to increase exports, but Argentina has always done so. I have trouble. Since 1950, the economy has been in a recurring crisis and has suffered more recession than any other country except the Democratic Republic of the Congo.
“At the speed at which they are moving, Argentina is far from there. [to doubling exports in the next five years]”” said local economist Martin Lapetti.
However, La Petty agrees that the government is focusing on the right sector. “What I haven’t seen is a sign that they’re trying to implement a policy to make this happen,” he adds, adding that other more radical leaders of the coalition in the diverse power could undermine Kurufus’ efforts. I was afraid there was.
Last month, beef exports were suspended for 30 days after domestic prices doubled over the past year, affecting domestic consumption, one of the country’s most iconic commodities. Many officials feared this would undermine the government’s popularity ahead of the big midterm elections in November.
A local producer ridiculed Kurfus’ desire to double beef exports in the current situation. [export taxes] And controlled exchange rates. .. .. We are losing customers every day, and some of them will be difficult to recover. “
The government’s tendency to intervene in all sectors of the economy, from price and currency controls to tariff freezes to the threat of nationalization, often suggests that the private investment needed to boost exports may not come. I scared people. In addition to these fears, the influence of the vice president and former leaders is increasing. Cristina FernandezNotorious for her constant intervention in the economy.
Kulfas agreed that policy predictability is essential to investing. “This is an important element to enable long-term investment. Unfortunately, our starting point was very negative, ”he said,“ creating a lot of uncertainty ”in Argentina. He stressed the need to rebuild public debt, the expansion of the budget deficit and the depletion of foreign exchange reserves.
As the government tries to address these issues, Kulfas says investment continues to come in and the economy is picking up. He points out that the industrial sector is already producing more than in 2019 before the coronavirus epidemic.
“We have economies that are moving at different speeds today. We have growing sectors like industry, construction and agriculture, and in some cases they are experiencing significant growth while others. Also [such as tourism] It was a big blow, ”Kulfas said.
He denied that there has been an influx of foreign companies from Argentina since Fernandez came to power. He said Wal-Mart’s departure last year was due to an international restructuring program and that local companies that had acquired the company were continuing to invest.
“We see the opposite [of an exodus]Many sectors are positioning themselves because they recognize that Argentina is at a turning point, ”he said.
Still, Emily Hersh, managing partner of DCDB Group, a financial advisory firm with offices in Buenos Aires, is skeptical that “there aren’t many deep pockets now that want to invest a lot of money in. Argentina ”.
The duration of Argentina’s early economic recovery this year depends heavily on its ability to modernize the country’s economy, focusing on developing new sectors such as lithium, renewables and medical cannabis. Kulfas said.
“A lot of people ask me, do you really think this is the time for a digitization program?[or]Talk about the Green Revolution? And I say it. It’s snowing. Every year we follow the changes that are happening in the world. .. .. I miss the train. ”