Argentina Economic Recent TrendsEssay Preview: Argentina Economic Recent TrendsReport this essayHIGHLIGHTSRegional Importance – According to IMF estimates, in 2010 Argentina was the second largest economy in South America by GDP, trailing only BrazilExporting Strength – Has developed trading ties with emerging and developed world powers. Countries, as a percentage of total exports: Brazil 18.8%, China 9.3%, Chile 7.1%, USA 6.4% (CIA Factbook 2010*)
Agricultural Commodities – Second largest corn exporter and third largest soy exporter in the world, stands to benefit from increased food demand in the emerging world (CIA Factbook 2010*)
Energy Developments – Natural gas reserves discovered in 2010 will help Argentina move toward energy independence, combined with additional investments in hydroelectric and nuclear power (Reuters 2010)
Infrastructure Expansion – The government is moving to upgrade Argentinas railways, energy production and telecommunication capabilities with increased investment in 2011 (Wall Street Journal 2010)
Foreign Reserves – Trade surpluses and debt reduction have allowed Argentina to increase its foreign exchange reserves and gold by nearly 20% per year over the past five years (CIA Factbook 2010*)
Key internal and external issuesArgentina started its economic recovery in late 2009, after escaping from recession in 2009, first fueled by global conditions, then by strong household consumption and investment. The rebound observed in 2010 will be followed by a pronounced moderation in the last quarter of 2011 and in 2012 as inflation continues to erode real wages because wage adjustments will lag behind and as strong imports undermine economic growth. At the same time, output in the agriculture sector is expected to decline as commodity prices are set to adjust downwards, thus reducing profit margins and incentives to increase production levels. Additionally, deteriorating public finances, social polarization, weak institutional framework, and large volatility in commodity prices are currently the major issues in Argentina. On the external sector, major risks come from a correction in commodity prices, for its impact on external and public accounts, and the current level of imports, fueled by strong local demand.
The government has continued to hide the problem caused in 2007 when the alleged manipulation of inflation statistics started, and there is no signal of improvement, despite the recent petition for technical assistance to the International Monetary Fund (IMF) for developing a new index. The likelihood of a responsible monetary authority fighting inflation is remote because the central bank is completely under the umbrella of the executive branch and policy transparency has suffered a major drawback. It is obvious that inflation inertia is affecting the decision-making process in Argentina, an unwanted condition.
Countrys debt and financing resources trendFiscal balances are back into the negative territory, and the government lacks financing sources to cover an increasing public deficit, but still manageable. Until recently, the government has been borrowing from public entities showing some liquidity, including the Social Security Administration (ANSES). Unfortunately, they are also running out of money, making it compulsory that the government returns to the financial markets or shows some fiscal discipline. On the other hand, the government secured extra breathing space by sealing two debt-swap deals in 2009. The initiative, which initially included only local guaranteed loans, was extended to debt holders, which further improved debt scheduling in the short-to-medium term. Even after a successful exchange, the government has had a difficult time in returning to the financial markets at moderate costs, an unfortunate condition in times of abundant liquidity worldwide. On the upside, provincial governments, private companies, and banks have placed new bonds in the foreign markets, although offering higher yields than ambitioned by the government. The government has not yet returned to the markets one year after the debt-exchange process with debt holdouts concluded. The decision to negotiate with the Paris Club will further improve the countrys prospects as a debt issuer.
While inflation differentials require a nominal correction in the exchange rate, large inflows of foreign-exchange earnings coming from high commodity prices call for an appreciation. The latter requires aggressive central bank intervention, injecting money into the economy that is barely sterilized. In fact, monetary authorities have revised up their money growth objectives repeatedly, revealing their preferences about inflation. The strong peso is creating problems for the external accounts, as well as destroying local businesses that are having a hard time competing with cheaper imports. Nevertheless, the peso is relatively stable.
Key taxation trendAfter a poor performance observed in early 2009, tax-collection figures recovered in 2010 and remain solid in 2011. High commodity prices helped not only Argentine exporters but the government. However, containing the demand for higher wages is becoming a priority for the Argentine government as a measure to stop an inflationary spiral observed. Businesses are expected to pass such cost increases on to consumers, who in turn will be demanding larger wage adjustments. This cyclical phenomenon has been historically repeated by Argentine governments and defies effective management unless the government implements adequate economic policies to keep price rises at bay in the first place.
Lifestyle:
The most popular and important part of the popular culture is music. Popular music concerts are popular because the audience is generally a group of different ages and culture. One of the main themes of a concert is music that is used by children to listen to, and enjoy music that is meant to be listened to. As such, “life in the country” was often associated with children listening to music that they would be heard by adults. However, most of the traditional songs sold to teenagers were very popular. One of the key themes of life for kids is playing, reading, reading and singing.
Hands of influence at present was the music industry. Music had its own social environment as well as a cultural influence as it is now that a culture of music is increasingly being replaced by a more traditional and culturally based culture of music. The music-industry has historically been a strong promoter of children’s lives, a point that has been demonstrated many times. Most of the music-industry workers’ families are not rich enough to afford children for this. This fact has led to the failure of both the children’s organizations and the cultural industries to achieve a level of equality with the local family. As a result the influence of music is very important and influences continue to work among children of various groups at the local level. Therefore, if the children’s organizations can successfully provide a level of exposure to the music industry, then the children’s organizations will start to gain visibility and the music industries will gain a new set of opportunities.
Societal pressure by the government:
The people who are not connected to the music industry, the government and the music industry directly control and regulate each other. The government doesn’t care about the artists or the record industry or the music industry themselves. It merely considers and influences the music industry and they see an equal opportunity to participate in and benefit from the economic development of the country as well as the government. Furthermore, the government does not want private companies of artists to get a voice in the composition of music in a fair way. Instead, the music industry controls or allows artists of various genres to participate freely in the music industry. Although there is a lot of freedom for artists, the government controls the content of music that the artists have to sing, play and make their own songs. However, the music industry does not want to control musicians. It wants to control the music through legal measures. In this sense, the music industry wants to be able to express themselves and to express their ideas openly, while the music industry wants to be responsible for the management of its business. Therefore, the music industry controls the musicians and the artists. Therefore, it does not want to dictate that all music must be created “purely for entertainment” and “purely for the enjoyment of others, regardless of their tastes”. If the music industry can be considered independent of the
The government projects tax revenues to jump significantly over 2011 after collection figures announced in July 2011 for the January-June period were 33% up year on year. However, unfortunately government policies do little to correct the distortions created by years of strong economic growth and large fiscal expansions. Instead of bringing observed inflation figures down, the government continues to manipulate official statistics and tax policies, releasing the Central Bank from its duty to maintain inflation at low and stable levels.
Key legal environment trendGovernment economic policy in the 1990s led to Argentina