Magazine article Business Credit

Will New Leadership Improve Argentina's Economy?

Magazine article Business Credit

Will New Leadership Improve Argentina's Economy?

Article excerpt

By a 3% margin, conservative Mauricio Macri won Argentina's presidential election in late November. A change in power may lead to a shift in the country's trade stipulations, a potential result that credit professionals should keep on their radar.

"Among the issues he faces right away include a widening deficit, double-digit inflation and a severe currency crisis," commented NACM Economist Chris Kuehl, Ph.D. "The country has had no access to speak of when it comes to foreign currency and especially dollars."

Argentina has also long suffered from currency controls, added Garfield Minto, CICP, manager of accounts receivables and collections for NuVasive, Inc. Minto believes that there will likely be a favorable shift in the markets based on the leadership philosophy of the new president. "One of the greatest setbacks for my company, and I imagine other firms that operate in Argentina, is the lack of ability to export payment that would otherwise increase the flow of goods and other needed services into the economy," Minto said. "This change in political momentum will help increase the velocity of goods and services and hopefully the fluidity of international payments. Once markets begin to see this change, then they will be more likely to participate in this emerging market and look for increased profitability."

However, with Macri still so new to the position, immediate or medium-term changes for credit professionals are difficult to predict. …

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