Whats behind the calm in the financial markets?
Calmer financial markets in spite of lack of political changes. The biggest surprise in August was that in spite of continuous turmoil on the political front and last minute Government efforts to increase its power before the new Congress is inaugurated in December, the financial conditions have improved dramatically. Short-term peso interest rates have dropped […]
Hopes, concerns and challenges after the elections
The economic outlook following the elections presents hopes, concerns and challenges. There is hope because it now seems clear that the Kirchner’s have no chance of being reelected in 2011 while the leading candidates are all more moderate and sensible than them and hence economic policies will almost certainly improve after the presidential elections. We […]
Election turmoil or soybean-led recovery?
Reflections before the Elections. As the country is getting ready to go to the polls the economic and financial conditions provide a mix picture. On the one hand, the financial front has remained relatively calm, especially given the volatility that is typical of election periods. There has been a significant tightening in credit spreads in […]
Economic developments governed by the election
Why have financial conditions improved? The Argentine financial markets have been more stable in the last few weeks, as the exchange rate stabilized in the 3.70 to 3.75 range, deposits remained steady, and the price of Argentine bonds have rallied after months of being depressed. The reasons for this improvement are to a large extent […]
Same questions about Argentina: have the answers changed?
The new international environment and the IMF. The international financial crisis appears to be receding and the recent evidence provides some support to those that believe that the worst of the financial panic is behind us. Although we are not anticipating a strong recovery in stocks or in real estate prices, neither a smooth path […]
The economy hostage of politics
The decision to move forward the elections and the new conflict with the farmers has changed the economic scene in at least two ways. First, it has increased the concerns about the exchange rate, as the farmers are postponing the sale of export proceeds while small investors are shifting their portfolios to dollars as the […]
Exports fall, capital outflows continue, but no major problems in the horizon
The Argentine economy is starting to feel the pinch from the global recession and construction and industrial production are the first sectors to feel pressure The outlook is worsened by the drought that could reduce agriculture production by as much as 20%. The recession is having a large negative effect on tax revenues, but the […]
What went wrong in 2008 and the outlook for 2009
The year 2008 probably marked the beginning of the end of the current economic model, what we termed Penguinomics. The year 2008 probably marked the beginning of the end of the current economic model, what we termed Penguinomics, which was based on an undervalued currency and low interest rates, twin surpluses and accumulation of international […]
Lots of fireworks but little firepower: the Argentine policy response
The Argentine economy is likely to face a recession and the Government lacks policy instruments to avoid it. Fiscal policy is restricted by lack of financing while it seems difficult to use expansionary monetary policy or to resort to a maxidevaluation while deposits remain volatile. In the meantime capital outflows have receded as the Central Bank […]
Fiscal and financial impact of the new domestic and international environment
The year of living dangerously. The Argentine economy is facing the most difficult juncture since the 2001 crisis. The recession could be around the corner, consumer confidence has collapsed, there are pressures on the currency and international reserves are falling, domestic interest rates have sharply increased, there is a credit crunch and the spreads are […]