The economy at a crossroads: is there a way out?

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The economy at a crossroads: is there a way out?

Abril 2013

The Argentine economy is showing signs of fatigue and deterioration and there is little hope at the moment that the outlook could improve in the near future. Between 2003 and 2011 Argentina enjoyed an overall good performance characterized by high growth, external balance and a reasonable fiscal situation with relatively small side effects on inflation, the level of country risk and problems in the energy sector. Somehow it got away with murder.

But the economy faced a turning point around mid-2011.  Since that moment things have been going downhill, as the scene has been dominated by stagflation, pressures on the currency that led to a sharp depreciation of the parallel exchange rate and a tightening of foreign exchange controls, a significant loss in competitiveness, a persistent drop in international reserves driven by capital outflows and a large increase in Argentina’s sovereign credit risk.