Saturday, October 20th 2012 - 05:44 UTC

Argentina and Colombia dispute place as second largest South American economy

Argentine Economy minister Hernan Lorenzino struck back at Colombia’s claim that it has overtaken his country to become South America’s second largest economy behind Brazil.

Herman Lorenzino dismissed Juan Carlos Echeverry but again: how reliable are Argentine stats?

Lorenzino, in messages posted on Twitter on Friday said data from the IMF show that Argentina, with a smaller population, has a GDP more than 100 billion dollars larger than Colombia’s. The gap between the two countries’ nominal GDP is growing, and GDP per capita is also larger, he said.

Juan Carlos Echeverry, before stepping down last month as Colombia’s Finance minister, argued that his country’s economy was 15 billion dollars larger than Argentina’s as a result of the Peso’s slide on the unregulated currency market.

Because of the strict money exchange restrictions (‘dollar clamp’) imposed by the Cristina Fernandez administration, in the unregulated exchange market, or ‘blue’ market the Argentine Peso has declined 25% this year and ended the week’s trading at 6.3634 Pesos per dollar. The official rate is 4.7312 Pesos per dollar.

According to Etcheverry the Colombian GDP is equivalent to 362 billion dollars against the 347bn for Argentina.

“That affirmation isn’t only inaccurate but also intentionally harmful,” Lorenzino wrote on Twitter after Echeverry repeated his argument in a Financial Times column published this week.

“This large difference between market rates and official rates means that calculations of the dollar value of Argentine GDP using the official exchange rate are biased upwards,” Echeverry wrote in the FT on Oct. 15.

“The evidence points towards an indisputable fact: Colombia has managed to place itself in the leading pack of the region in terms of economic growth, size and long-term potential.”

Lorenzino didn’t address Echeverry’s argument about the competing exchange rates, saying only that it’s “an error” to affirm Colombia’s GDP is bigger.

However he appealed to IMF and ECLAC figures to support his arguments saying Argentina’s GDP is equivalent to 471bn dollars compared to Colombia’s 378bn. The World Bank at the end of 2011 estimated Argentina’s GDP in 446bn and Colombia’s in 332bn.

“ECLAC (UN Economic commission for Latam and the Caribbean) says our economy is approaching the 500bn dollars while Colombia’s has yet to reach 400bn” said Lorenzino in his twitter.

The Argentine minister never gives press interviews and refuses alls media contacts, thus his appeal to twitter.

Echeverry in August said he was resigning as Finance minister to apply to become the IMF Western Hemisphere director in charge of monitoring the Latin American and Caribbean economies. Former Chilean Finance Minister Nicolas Eyzaguirre resigned from the Washington-based post in July.

If Echeverry wins the job, he’ll have to manage relations between the IMF and Argentina that have deteriorated since the country’s 2001 default on 95 billion dollars in sovereign bonds.

The IMF has also repeatedly criticized Argentine government statistics it says don’t accurately reflect GDP or inflation which private economists put at over 24%.
 

26 comments Feed

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1 MaxAue (#) Oct 20th, 2012 - 06:32 am Report abuse
Lorenzino, in messages posted on Twitter on Friday said data from the IMF show that Argentina, with a smaller population, has a GDP more than 100 billion dollars larger than Colombia’s.

....thought IMF were all crooks and were not to be listened to?!?!
2 Troy Tempest (#) Oct 20th, 2012 - 06:41 am Report abuse
Are there “good” crooks and “bad” crooks?

Crooks that are “good” one day and “bad” the next??

Argentina's government is very skilled at telling the “good” information from the “bad” information ;-D
3 DanyBerger (#) Oct 20th, 2012 - 06:45 am Report abuse
No need to dismissed Juan Carlos Echeverry if he want to sell to the world that Colombia is the 2nd economy in SA its fine.

Argentina should play the underdog card saying that it is the smaller economy in the world who cares?

Meanwhile Argentina has to keep the policy of re industrialisation in 10 year more Argentina will have a GDP bigger than Mexico.

So everyone will be happy.
4 agent999 (#) Oct 20th, 2012 - 07:09 am Report abuse
Another shining example of Argentinian democracy and accountability.

Economy minister Hernan Lorenzino - “The Argentine minister never gives press interviews and refuses alls media contacts”

The guy is an idiot, he is asking the IMF to confirm INDEC's figures on GDP.
The IMF has already stated they don't accept INDEC/Government statistics are accurate!
5 Guzz (#) Oct 20th, 2012 - 07:20 am Report abuse
Remove the narco from the equation, and Uruguay is a larger market than Colombia...
6 Pirat-Hunter (#) Oct 20th, 2012 - 07:27 am Report abuse
Juan Carlos knew how much money in guns and drugs Colombia was holding, that's why IMF figures didn't match Carlos figures. Everyday week mercopress comes out with at least one report pining one Latin community against another, apparently the fact that Colombia is holding talks with la FARC appears to have no journalistic value for mercopress. No wonder.
7 agent999 (#) Oct 20th, 2012 - 07:33 am Report abuse
@6 Pi-rat
As usual your facts are wrong,

en.mercopress.com/2012/10/20/first-exchange-of-blows-as-colombian-peace-talks-take-off
8 yankeeboy (#) Oct 20th, 2012 - 11:09 am Report abuse
Dany, WTF do you mean here “Meanwhile Argentina has to keep the policy of re industrialisation in 10 year more Argentina will have a GDP bigger than Mexico.”
Pure delusion
MFGs are laying off 10's of thousands of Rgs this year. you dolt!

Don't' be surprised if the car mfgs leave once and for all at the next crash.
Then watta ya got? nada
9 Falkland Islands (#) Oct 20th, 2012 - 12:25 pm Report abuse
as usual with Argentina, a dream, unfortunately it will always turn out to be a denied nightmare.
10 Clyde15 (#) Oct 20th, 2012 - 12:38 pm Report abuse
I must have missed something here. According to Argentina the whole S.A,Continent is in perfect loving respectful harmony ?
11 mcarling (#) Oct 20th, 2012 - 01:38 pm Report abuse
With CFK's current anti-economic policies, Argentina (which was the #1 economy in South America and the #2 economy in the world before peronism), the question will soon be whether or not Argentina can be ranked among the five largest South American economies.
12 Anbar (#) Oct 20th, 2012 - 02:23 pm Report abuse
“That affirmation isn’t only inaccurate but also intentionally harmful,”

“I must have missed something here. According to Argentina the whole S.A,Continent is in perfect loving respectful harmony ?”

Yes, indeed.

I wonder if there is any (nation) who can be so mortally offended, so very easily, as this Argentine Government.

Blink and they take it as an insult to the nation.

... of course, that's how populism 'works' ateotd....
13 DanyBerger (#) Oct 20th, 2012 - 03:03 pm Report abuse
@yankeeboy

“Dany, WTF do you mean here “Meanwhile Argentina has to keep the policy of re industrialisation in 10 year more Argentina will have a GDP bigger than Mexico.”
Pure delusion
MFGs are laying off 10's of thousands of Rgs this year. you dolt!”

I mean what I said in 10 years Argentina if keeping this policy will have a GDP close to Mexico and Bigger than Canada.

If you take into account that historically the ARG peso was equal to Brazil Real and now ARG peso is less than half of Brazilian Real, etc. ARG economy is close to a trillion dollar now.

Fluctuation of currency value plays an important part when you measure an economy in dollar terms and always you get distorted figures about the real size of a given economy.

You have the example of China which is an economy that will surpass US shortly but Chinese govt wants to keep Yuan low to keep surplus in trade and many have no idea of the size and power of China’s economy.

With Argentina is happening the same the peso exchange rate value is to low. The peso can go easily to be trade at $2.50 for a dollar like use to be before.

That have been a good equation to have inflation low and boost exports until the guys of “del campo” and UIA wanted a more devaluated peso to increase artificially their earnings.

Anyway in 10 years we will see...
14 yankeeboy (#) Oct 20th, 2012 - 03:23 pm Report abuse
Dany, You are breathtakingly stupid! Why don't you look at the Arg GDP as compared to other countries for the last 80 yrs. Argentina has fallen further and faster THAN ANY OTHER COUNTRY IN THE WORLD!

And if you think depreciated the peso is going to make you as rich as Canada you may want to look at Zimbabwe they'll must have the biggest economy in the world according you your idiotic math.

Good gracious how did someone with such a low IQ learn to type?
15 DeMouraBR (#) Oct 20th, 2012 - 03:27 pm Report abuse
“but again: how reliable are Argentine stats?”
Hahahaha, made my day!
16 Guzz (#) Oct 20th, 2012 - 03:32 pm
Comment removed by the editor.
17 ChrisR (#) Oct 20th, 2012 - 03:58 pm Report abuse
10 Clyde15

Yes, that goes with the 'Agreement of Perfect Peace' which they signed with the Brits in 1850 and Peron disavowed.

No change there then. :o)
18 DanyBerger (#) Oct 20th, 2012 - 06:27 pm Report abuse
@yankeeboy

You are so stupid and ignorant than its is a waste of time to reply you but as I’m close in the neighbourhood...

The size of a given economy cannot be measure by currency values or measured in US dollar or whatever because the result always is a fiction.

Bankers use to do that for own interest and the easy to know aprox how profitable x economy can be for them in x currency.

If you allow bankers and pseudo economists good for nothing to measure countries population they will use dollar exchange and maybe they will arrive to the conclusion that China and India has less population than US and that Argentina has only 8.3 million inhabitants.

An economy is bigger or smaller for it power to produce and trade goods and services and not to the artificial value given by currency exchange.

That is the reason why some countries like China where under measured, in the 90 China economy where given a GDP of 398bn dollars by IMF now after 22 years IMF is measuring Chinas GDP at 8trillions USD (nominal) and more than 11 trillions USD (PPP).

So mister genius can you explain to us how a country can grow from 398bn USD to 8trillions in 22 years?

Can you explain also why IMF was measuring Arg GDP to 110bn dollars in 2002 and now if given 475bn (us dollar official ER) and close to 800bn in PPP?
19 Hook (#) Oct 20th, 2012 - 10:30 pm Report abuse
@yankee

My friend went to Colombia after living 1,5 years in Argentina, and when he changed some of the remaining Argentinian pesos he had, the price was 40% less than when he went to Argentina only 1,5 years ago!!!

and another thing, all the prices in Colombia were exactly the same as 1,5 years ago when he left.
20 The Chilean perspective (#) Oct 21st, 2012 - 03:43 am Report abuse
18 DanyBerger
You really must be retarded. You say “An economy is bigger or smaller for it power to produce and trade goods and services ” Which is perfectly right but then you go off to la la land.
A trading nation does so using the world's reserve currency. All its activity should be ultimately measured in that currency in order to compare it to other economies. You seem to think that the Argentine peso is undervalued. You are wrong it is VERY VERY overvalued, your country has an average yearly M2 money supply increase of 30% and an inflation rate of close to 30%. These two factors should have a drastic effect on a currency but in Argentina's case they have only devalued the Peso officially about 70 centavos since the start of 2011. I think it should be closer to 10 Pesos per Dollar, this would be a good thing and your exporters would benefit. In fact it was the massive devaluation in 2002 that gave the impetus to the growth that argentina enjoyed till now. One thing I should mention Argentina's impressive PPP GDP is totally FAKE. The govenment figures are inflated by the fictitious prices given to the basket of goods and services and WORSE still the exchange rate used is a ridiculous 2.5 Pesos to the Dollar. NO WAY is the economy even close to the size reported, it is all just a wet dream on the part of the Argentines.
21 Hook (#) Oct 21st, 2012 - 05:35 pm Report abuse
sorry, said it wrong. He lived 2 years in Argentina and when he went back to Colombia, they gave 60% less for the Argentinian pesos he changed to Colombian pesos, so the ARG-peso had dropped 60% against COL-peso in just two years. Meanwhile many product prices in Argentina went up more than 200% in 2 years(but some, very few products remained the same for some reason, like unsliced chicken) still all the prices in Colombia remained the same when we went back.

Imagine all the foreign students living and working in Argentina; Chileans, Peruans, Colombians, etc..when they return to their countries after graduating, all their saving are gone.
22 GastonBaires (#) Oct 22nd, 2012 - 03:28 am Report abuse
As mister Berger said this is not an issue. Es para que hable la gilada!
23 Hook (#) Oct 22nd, 2012 - 03:21 pm Report abuse
www.lanacion.com.ar/1519444-efecto-inflacion-buenos-aires-cara-como-nueva-york

they claim BA is as expensive as NY

LOL
24 DanyBerger (#) Oct 23rd, 2012 - 09:47 am Report abuse
@Hook

“they claim BA is as expensive as NY”

Yeah sure and the pigs fly...
25 Hook (#) Oct 23rd, 2012 - 12:01 pm Report abuse
24@ shut the fuck up moron!
26 British_Kirchnerist (#) Oct 29th, 2012 - 02:25 pm Report abuse
Argentina is clearly more developed than Columbia. And more importantly, is not a hellhole of drug cartels, death squads and endless war - surely the right must be a bit embarrased of their Colombian “model”?!

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