Argentina's Economic Outlook 3Q 2011

Quarterly  Reports

 

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Argentina's Economic Outlook 3Q 2011

Third quarter
2011

Argentina is facing a 'mini-crisis” in the financial system. The main problem has been a wrong diagnosis of the causes of the capital outflows and policy mismanagement.

The new restrictions of dollar purchases and the government approach to address the problems in the FX market show that the instinctive response to economic problems is still to rely on government intervention and that at least for the time being we should expect to see more of the same, especially regarding inflation and a few other sensitive issues.

 

The economy is now undergoing a period of financial turbulence which can still escalate a little further, but we still do not think that it will end in one of the traditional large financial crisis. The current situation will undoubtedly affect economic activity and financial conditions, but there are enough reserves and financial resources to withstand a run on the currency and on deposits.