Argentina Investment Outlook: Winds of Change

 

Executive Summary

Current political situation
The candidate proposed by the opposite political sector, Mauricio Macri, former Mayor of the City of Buenos Aires, won the presidential elections and took over on December 10th, 2015.

Country economic overview

Economic activity: it will remain weak in 2016, but this trend is expected to be reverted and growing at a very dynamic pace from 2017 onwards.

Exchange rate: It was overvalued but recent measures were taken to correct the lag and also for the unification of the foreign exchange market.

Inflation rate: It has been high during the past ten years but, though still high for 2016, is expected to decelerate in 2017.

Sovereign debt: Limited access to external financing due to default impact. This situation is expected to be solved in 2016.

Potential changes:

– Reliable national statistics to measure inflation, poverty and unemployment.
– Strengthening regional economies through abolishing taxes on exports, providing them more competitiveness regularizing the exchange rate over-appreciation and helping them with logistic costs through extensive infrastructure investment plans.
– Recovery of the energy sector through rate adjustment that will allow investments.
– Focus on investments promotion for infrastructure, improve service level, increase Central Bank reserves and increase genuine employment.

Main challenges:

– Successful resolution of sovereign debt holdouts
– Reduce fiscal deficit and inflation

Opportunities:

Current asset values in Argentina are lower compared to local historical figures and to asset values of the region. There are investment opportunities mainly in the following sectors: Infrastructure, Agribusiness, Renewable energy, Oil and gas, Utilities, Knowledge-based services, Meat production, Mining and Banks.

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