Foreign Analysts do not see a bright future ahead for Argentina's economy. While some place it among the countries most likely to default its debt, others fear it might not survive a new adjustment to the basic interest rates by the United States.
Brazilian President Jair Bolsonaro has said in his social media broadcast that “only a miracle will save the Argentine economy,” as he referred to the administration of his colleague Alberto Fernández as “a regime that did not work anywhere in the world.”
Argentina's July inflation rate was 1.9%, the government's Indec statistics agency reported on Thursday, bringing the seven-month rate to 15,8% and the 12-month rate to 42.4%. During July the items which showed the main increase were Housing maintenance, 3,9% and Leisure and Culture, 3,3%, with a special emphasis in electronics and home appliances.
Argentina’s economy is seen shrinking 9.5% in 2020, according to a monthly poll of analysts by the central bank released on Friday, compared with an estimated 7% decline in the previous survey, as the activity gets walloped by a nationwide lockdown against the coronavirus pandemic.
In the midst of the chaotic situation caused by the pandemic, the Argentine government announced the abandonment of Mercosur negotiations to prioritize the country’s domestic economy and the struggle against the virus. The rest of the bloc members must evaluate legal, institutional, and operational measures emerging from the decision.
Argentina's GDP contracted 2.2% last year, hit by the downfall of manufacturing, retail and financial activities, according to the official stats office, Indec. In the last quarter of 2019 the economy dropped 1% over the previous quarter and 1.1% compared to the fourth quarter of 2018.
The World Bank Board of Directors approved a new US$ 300 million operation to support Argentina’s efforts to strengthen its social protection system and minimize the impact of the crisis on the most vulnerable families.
Argentina’s government said on Sunday it had hired Lazard as financial advisor and Bank of America and HSBC as debt placement agents for the debt restructuring process it hopes to close by the end of March.
The Financial Times dedicated on Monday an editorial to Argentina and its current strategy to avoid again defaulting by pressing on the IMF, and later on sovereign bondholders, for a significant haircut in its national debt approaching 90% of GDP. However, FT points out that “debt talks are unlikely to succeed without a strategy for economic revival”
Argentina’s economy minister confirmed bondholders’ worst fears, telling them to brace for significant losses as the country restructures its debt amid an economic crisis. Martin Guzman warned that holders of Argentine debt will probably be disappointed by the restructuring, without providing specifics on how steep losses could be.