We examine the state of a fundamental shift in economic policy by the Argentine government, and how that shift has played out in the country's key oil and gas sector. We see the January currency devaluation as part of government efforts to engineer a relatively soft landing for the economy as years of macroeconomic imbalances begin to unwind. Broadly speaking, the shift in policy that we have seen is marked by a move away from policies hostile to the private sector, increasing emphasis on attracting inbound investment, and rapprochement with the international financial community. However, we caution that the reforms being pursued may end up being too little, too late, as there remains a very high risk of another currency devaluation or full-blown economic crisis in the next two years.
Business Monitor International (BMI) has published a Special Report - Argentina: Can Another Crisis Be Avoided? - that puts the recent currency devaluation into the broader context of a change in government policies in order to avoid a major economic crisis. The report brings together Country Risk as well as Oil & Gas analysis, including a macro-industry strategy view.
We believe the economic leadership has taken the initial steps needed to manage long-standing economic imbalances and engineer something of a soft landing for the economy. The recent devaluation has bought the government time to address other structural issues - such as high inflation - as well as bring in investment to the oil and gas sector, which we believe will be crucial to stabilizing the country's external accounts over the medium term.
However, there are still lingering questions, including whether the government will be willing to rein in fiscal and monetary expansion, or whether the popular unrest to needed reforms will prevent the government from moving further.
The report benefits from BMI’s 30 years of experience to critically evaluate the outlook for Argentina, helping you assess the role that the country could play in your company’s growth strategy going forward.