Morgan Stanley cuts Argentina’s growth estimates and forecasts 2013 devaluation
Morgan Stanley has cut its 2012-13 growth forecasts for Argentina and forecasts a sharp devaluation of the Argentine peso next year as the economy starts to unravel amid high inflation and policy missteps.
“Argentina's economy is facing a hard landing as activity has stalled partly due to an increasingly heterodox policy response,” Morgan Stanley economist Daniel Volberg said in a report.
Morgan Stanley revised GDP for 2012 to 2.4% from 3.1%, and for 2013 to 0.5% from 3%. The bank left its year-end 2012 exchange rate forecast unchanged at 4.95 Pesos to the US dollar, but it sees the Peso ending 2013 at 7.00 to the greenback.
Volberg said the statistical carryover from 2011's strong growth will account for almost all of the 2.4% growth he forecasts this year. “Indeed, we now envision Argentina's economy posting virtually no sequential growth over the remainder of this year and next”.
Argentina appears to be at the end of one of its longest periods of rapid economic growth in a century.
The Argentine economy almost doubled in size between 2003 and 2010, growing an average 7.6% a year during that period, though many economists think the economy contracted several percentage points in 2009 owing to the global financial crisis. The government's highly suspect economic statistics put growth at 0.9% that year.
The economy quickly rebounded to expand 9.2% in 2010 and 8.9% last year, according to government data.
But underpinning Argentina's almost decade-long boom were high prices for its bountiful grain exports, strong demand in Brazil for Argentine manufactured goods, and a recovery in the domestic economy that has pushed unemployment down to multi-year lows.
Though grain prices remain sky high, commerce with Brazil has been badly wounded by trade wars and a sluggish Brazilian economy. President Cristina Fernandez's efforts to goose the economy have fuelled inflation that many private-sector economists say has averaged around 20% for several years.
Inflation is causing headaches for exporters, especially manufacturers who have to contend with even higher wage increases won by unions. The Peso has also firmed against the dollar as the central bank's gradual weakening of the currency hasn't come close to offsetting inflation.
The Cristina Fernandez administration's apparent tolerance of high inflation has undermined faith in the peso and the economy in general.
Capital flight surged to a three-year high of 21.5 billion dollars in 2011, prompting authorities to impose strict foreign exchange controls in October to preserve the central bank's international reserves. Argentina plans to use about 5.67 billion in reserves to pay her government's creditors this year.
Dollar rationing was followed months later by import controls, whose main purpose is to trim hard currency outflows.
Those measures have disrupted activity in the residential real-estate market, where transactions used to be done overwhelmingly in dollars, and in industry, as many companies can't get dollars to pay foreign suppliers.
“The combination of stalling economic activity with rising inflation is fuelling expectations of a one-off large devaluation,” Volberg said.
While Argentina's economic problems appear daunting, the government enjoys a strong balance sheet, with international reserves covering 63% of public external debt.
“We suspect that the fears of pesification or repudiation of sovereign debt obligations are likely overstated, as the authorities have the ability and willingness to service debt, at least in the near-term,” Volberg wrote.
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Which Morgan Stanley and all the others promptly and completely missed out on, since they have predicted gloom and doom since circa 2003 (remember how the recovery from 2001 was a dead cat bounce that would stall by the end of that year, according to these same people?)
They have no credibility whatsoever.
No, it does not count if they are right this time. Even broken clocks are right twice a day.
while Argentina continues to buries its head in the sand the great ship AA Argentina is at full steam heading for the rocks without a rudder, it will end in tears.
and i cant wait! :)
Like!
Gosh don't they ever get tired of the same old story?
As I said yesterday 7/1 will be the gov't rate..if they're lucky and if the peso doesn't get away from them...once panic sets in who knows where it will fall out.
So watch for hyperinflation to quickly follow...then the real devaluation will happen....anyone remember the Austral?
As I have been saying here for month, and yankeeboy refuses to learn from the smarter man that I am, Argentina is not “devaluating” in the most known sense. It is de facto revaluating because of the high inflation rate.
If yankeeboy came with his 10k a month salary in 2009, he would have gotten 38k pesos. I he comes today he would get 45-50k, but they buy MUCH less than the 38k once did. Which means he needs to bring 13-15K... which means that to him, Argentina is more expensive.
That's not exactly a devaluation, and why Argentines now have more purchasing power to go overseas.
Of course yankeeboy accused me of not knowing my economics, but here is his God Morgan Stanley saying just as much.
I'm too smart for y'all.
whats 2 and 2,
one anwser only.
In Britain, a swingers' night.
We may have run into each other when I left you to clean my ordure as I went back to dance with beautiful chicks from all over South America.
Your economic analysis is fascinating...
Have you ever thought about getting a job with the North Korean news service?You'd fit it beautifully.
You worked at Grisu too? Close enough to the Chilean border, and of course loads of Chilean girls go there to try to find something missing in their lives.
That was like 16 years ago.... Wonder what that entire city looks like nowadays....I ll have to admit that I didn't see any villas or sewer water running by the curve there like I saw in Buenos Aires ....
My was in Buenos Aires last week and he told me that villas are growing by the airport now.... Wow he said villeros will welcome us to Argentina when we get there Monday morning!
I've never seen sewer water running in the streets, period. Except maybe during a massive storm 7 years ago, when all the lids on the sidewalks blew.
Another one that worke at Grisu, who would have thougtht?
Just another place where I conquered foreign soil. :)
And regarding the villas:
Caraza, Fiorito, Ing Bunge, Diamante, Retiro, La Cava, Camino Negro (oh my what a place to be)
I lived in BA for a while, and even though it was not most of my life, I still remember the kids wearing Nike shoes pulling a “botellero” buggy
The waters on the streets, main avenue in Great Buenos Aires' Lanus, water coming from the houses and being dumped into a large drain...like in the 40s around here....
I remember taking Bus 20 and I dont remember why right this second but it took us somewhere you had to duck and avoid the arrows flying from the savages on both sides of the bus :)
I cannot say what it is to live there now or before that because I was here until my teens and moved back here shortly after a couple of years of college down there (another big adventure) , but I remember my teenage years....
so regardless of villas being less than in other places, you do not see that here and furthermore, if you go to Canada, their villas are middle class homes here in the US.... so to give you an idea...the projects here (low income housing) are luxurious compared to many neighborhoods in BA, our ghetto is a country club compared to BA s villas.
No offense, but it is true....
Good day
I guess you have to get out more often mate.
Shantytowns Ontario
www.youtube.com/watch?v=LnVTqJjV5Uc
Los Angeles California
www.youtube.com/watch?v=CnnOOo6tRs8
Sacramento california
www.youtube.com/watch?v=1owwvwi6t30
www.youtube.com/watch?v=tGxKdDinkKk
Providence
www.youtube.com/watch?v=ndanGXV_uYU
New jersey
www.youtube.com/watch?v=VxDnlvbLr0Q
San Diego US streets full of formerly middle class
www.youtube.com/watch?v=ICx3AfSlc-w
Poverty in rural areas
www.youtube.com/watch?v=SutshaFS3lk
www.youtube.com/watch?v=H8RIFtrXMAk
US Poverty documentary
www.youtube.com/watch?v=whlEY1DAidw
Pretty shocking isn't it?
I'll take care myself of those 225 million phounds. I get it, the UK is desperate to plug the holes on the ship, falling to such a level of self-denigration it is resorting to begging for this kind of scrap change on the world stage. How the mighty have fallen...
@16
Even 5 years ago the UK was producing (still) pretty good music. Today? Has anyone even heard a good song out of there? The only one that maybe has some spark left is Ella Gold. Otherwise, it is a sad wasteland of a former great country in music (no, Coldplay is washed up now).
I guess you do have some great music: One Direction, LOL!
Sad.
And the London scene is the most overrated on EARTH. Everyone with brains goes to the Netherlands, and not to Amsterdam, for the only club life of worth in Europe.
You obviously haven't heard of Muse, Mumford and Sons, Noah and the Whale, Bellowhead, Keane and lots of other UK uber groups.
Finally Coldplay have one of the biggest selling albums this year and so are not exactly washed up.
Coldplay, to us that know music, are washed up. By that I mean nothing innovative, they are good, but it's not like they are groundbreaking.
The other stuff sounds indie, and indie is allright, but there is great indie in most countries, because of the nature of the genre. Nothing unique to the UK, per say.
Last year I decided to update my music collection for the first time in way too long. I read around music magazines and looked to see what had been winning acclaim, then downloaded accordingly. I was sadly disappointed with the results. Most was rubbish.
Cold Play = commercialised Radio Head.
Even if thats true its far from a disaster that the K model has led to such unprecedented success in the first place. Missed out on by the financiers as pointed out by TTT. So why actually should we trust them now?
God bless your unilluminated soul.
Some Piazzolla
www.youtube.com/watch?v=bJWD_789-OE
and...
www.youtube.com/watch?v=F0iWc9LbHH0
and... 60s + 90s
www.youtube.com/watch?v=Gr1pzr_rDvc
Please stick to American music dear, don't venture to what you clue don't have.
God bless Cerati.
You have great musicians, but you have better commercialised music than you have good music. This doesn't take any credits from the many great musicians your country holds, I only wish we could hear more of them and less of Lady Gaga and Rihanna...
TTT
Present:
www.youtube.com/watch?v=CD9BwiTwqDw
Enjoy :)
Not of late. Which US rock bands are really renowned right now? None. What about Jazz? Most good jazz is coming from places other than the USA. Rap is America's Cumbia Villera. Nothing else really registers from the USA outside those three. Most electronica is European, country music is not popular outside the country.
www.youtube.com/watch?v=0W24WHbzQYE&feature=related
Sent from my iPhone
Check out this video on YouTube:
www.youtube.com/watch?v=38b3RVg7Jpo&feature=youtube_gdata_player
Good music has no borders :)
some styx
Even though I'm atheist, great vibes on that tune
Try this one (hope you understand spanish, my songs are all about lyrics)
www.youtube.com/watch?v=RQ4CsL0guXQ
By the way, TTT, that Cerati piece is an amazing work of art...
A little negative I would say. Life gives infinitely more than dreams.
I admit to the nostalgy, but the text says “your dreams will give you what life doesn't”, not that life will bring you nothing but dreams...
How about this one Condorito,
www.youtube.com/watch?v=43cL0lY-GbM
I liked your song by the way. Thanks for sharing
I didn’t mean “life will bring you nothing but dreams”, I meant, life can give you so much more than dreams.
Benedetti y Viglietti: very poetic and moving, I liked it. I hadn’t heard it before, thanks.
But, less nostalgia, dwelling and dreaming....live, love and regret not:
www.youtube.com/watch?v=qN3Y3Z5-3sw
They copied the music and they copied the song, but I still love it.
ZAS (Miguel Mateos)
www.youtube.com/watch?v=NyeY0ca6vUM
www.youtube.com/watch?v=67Gsu47uK-c
www.youtube.com/watch?v=1HncUEzLGPU
www.youtube.com/watch?v=EqjnJ9eSJ0U
Sumo
www.youtube.com/watch?v=mqp7QXQhFRc
www.youtube.com/watch?v=uVUTxmlC2jo
www.youtube.com/watch?v=z-ffo18esAI
www.youtube.com/watch?feature=endscreen&NR=1&v=wVeQRPbFWyI
www.youtube.com/watch?v=BmF9wjX_YeQ
Virus
www.youtube.com/watch?v=EZdKXUa4j3g
www.youtube.com/watch?v=wBBtcwCjuUY
Abuelos de la nada
www.youtube.com/watch?v=EqjnJ9eSJ0U
www.youtube.com/watch?v=rbqls_NCbe4
www.youtube.com/watch?feature=endscreen&NR=1&v=qrN4VOfF4mU
Rata Blanca
www.youtube.com/watch?v=uduqjWbFTgI
www.youtube.com/watch?v=m6504nlNuqo
www.youtube.com/watch?v=IwMXOwbnpRc
You forgot the Enanitos Verdes.
Just for you... and with lyrics ha ha
www.youtube.com/watch?v=UoeTkpNF2X4&feature=fvst
Thanks. I have the CD from back in the days when people used to buy music ;)
When people used to buy music.
Was that individually or one would buy so the others could copy it?
What a quaint and novel system. The recording companies must have loved those times.
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