Argentine Debt-to-GDP

[nicoenarg]

And finally, INDEC's published annual growth rate for Argentina:

 

[expatinowncountry]

If the chart is correct then, and seeing Argentine history, it doesn't matter how low their debt-to-GDP is then since Argentina manages to screw itself over regardless.

Secondly, wouldn't some still contend that the peso isn't falling fast enough and that the only way Argentina is able to remain competitive still is by, recently, strong arming other countries into decreasing their exports to Argentina while Argentine exports to those countries remain unchanged?

Or am I off on this one?

On the Peso, I think it was Morgan Stanley that said the Peso should be around $7 against the dollar by the end of 2013.

Argentina is losing competitiveness because of the strong real appreciation of the peso in the last few years. So you either: reduce inflation drastically, devaluate the peso, or you increase your productivity a lot. None of the three are easy, specially when you have incompetent people in the government. It did not help either that Brazil has devaluated the real lately. So, the solution the genius in the government found was to restrict imports.
Some Argentine exports will remain competitive almost whatever the government does (ie soybean) but others are collapsing. For example, Argentina was able to claim a good share of the inexpensive wine markets and they were exporting 2 euros Malbec (you see them in Africa and Asia for instance, would not try them personally). That market is gone. And it is even worst for the MOI (manufactures of industrial origin).
I really do not see how these people will turn things around. It can be done (soybean is at $600tn!!!), but probably not by them.

 

[davonz]

i would be very surprised if argentina isnt in recession already.

their beef export market has collapsed, arg was the 3rd biggest exporter of beef a few years ago, before CFK brought in the 35% tax on beef exports to keep to price low for arg consumers. Last report i read they had slipped to 10th places behind small countries like nz and urugary. i have also read somewhere they are a net importer of beef now.

manufacturing is decreasing. the renault factory in cordobra has closed down for this month i think, because of a huge drop in demand, mostly in their biggest market, brazil. from what i remember brazil takes 75% of all cars manufactured here.

from reports i have read the soy and maize/corn crops will be down by around 40% this year due to drought. this would usually mean a large increase in price, but demand is also dropping due to china slowing down, so probably not going to be any huge price increases.

also the local economy is slowing. building construction has dropped 30% so far this year if what one reads is to be believed. my landlady has a friend who builds apts, and a month ago he laid off 50 works, and says he isnt starting any new building this year, the only work he has going forward is finishing projects that are already underway.

 

[davonz]

Secondly, wouldn't some still contend that the peso isn't falling fast enough and that the only way Argentina is able to remain competitive still is by, recently, strong arming other countries into decreasing their exports to Argentina while Argentine exports to those countries remain unchanged?

I would agree with this. If you look at the brazilian real against the peso, the real has dropped 25% in the last year. I think the real is 30% down against the US$ in that same time period.
So this means that argentine exports to brazil will be 25% more expensive, and brazilian imports here would become cheaper. With brazil being args biggest trading partner it must have some effect, even with all the import restrictions.

 

[expatinowncountry]

i would be very surprised if argentina isnt in recession already.

their beef export market has collapsed, arg was the 3rd biggest exporter of beef a few years ago, before CFK brought in the 35% tax on beef exports to keep to price low for arg consumers. Last report i read they had slipped to 10th places behind small countries like nz and urugary. i have also read somewhere they are a net importer of beef now.

manufacturing is decreasing. the renault factory in cordobra has closed down for this month i think, because of a huge drop in demand, mostly in their biggest market, brazil. from what i remember brazil takes 75% of all cars manufactured here.

from reports i have read the soy and maize/corn crops will be down by around 40% this year due to drought. this would usually mean a large increase in price, but demand is also dropping due to china slowing down, so probably not going to be any huge price increases.

also the local economy is slowing. building construction has dropped 30% so far this year if what one reads is to be believed. my landlady has a friend who builds apts, and a month ago he laid off 50 works, and says he isnt starting any new building this year, the only work he has going forward is finishing projects that are already underway.

i agree with you in everything you said, except one thing... this week soybean beat all historical records reaching $612 in Chicago. demand is not dropping anytime soon. during the last forty years,, per capita meat consumption has increased dramatically in a number of emerging markets. For instance, the average Chinese went from consuming 9kg of meat per year in 1970 to almost 54kg in 2007. This number is expected to be over 60kg by 2020. The USA average is around 123kg and the Brazilian around 90kg. So there is still room for larger increases from the Chinese side alone. China today consumes 50% of all the pork in the world and 13% of all the poultry. Soy cake is the feedstock for excellence (very hard to replace cause the protein content) and that is why you have the Chinese VP visiting Argentina despite Argentina not been relevant economically because of its GDP size. They do need the soybean.[FONT=&quot][/FONT]

 

[davonz]

i agree with you in everything you said, except one thing... this week soybean beat all historical records reaching $612 in Chicago. demand is not dropping anytime soon.

From what is being reported/sales its on a downward trend..

http://www.indexmundi.com/commodities/?commodity=soybeans

http://www.cmegroup.com/trading/agr...lseed/soybean_quotes_settlements_futures.html

http://www.washingtonpost.com/busin...ard-of-trade/2012/07/11/gJQABaJ6cW_story.html

 

[expatinowncountry]

From what is being reported/sales its on a downward trend..

http://www.indexmundi.com/commodities/?commodity=soybeans

http://www.cmegroup.com/trading/agr...lseed/soybean_quotes_settlements_futures.html

http://www.washingtonpost.com/busin...ard-of-trade/2012/07/11/gJQABaJ6cW_story.html

Sales or demand? They are only equal in equilibrium. Prices are skyrocketing because of poor harvest (the drought you mentioned). Sales are going down cause there is not enough soybean to be sold. I think there is room for further demand increase in the future from emerging markets (ie: China). In any case, the overall effect in prices will depend also on supply conditions and those are hard to predict because of weather conditions and because of future supply responses from new emerging players (ie: the Chinese are investing like crazy in Zambia to produce soybean there and this is only one of the many examples).

 

[trennod]

Interesting graphs and discussion.

Also interesting to note that it confirms what a low base GDP was coming post 2001, hence you can understand the post growth figures.

 

[davonz]

Sales or demand?

I think demand is probably not going to change alot, but in the near term maybe, as demand for alot of other commodities has dropped in recent weeks because china isnt buying. But from the point of view of the argentine economy i think it is going to take a hit due to less soy being exported because of the drought and also because of the fact that prices are not increasing like they usually would in this situation. As has been reported in the news articles and recent sales the daily settlement price is down, and the price has been heading down since april, not to say it wont shoot up again tomorrow or next week/month/year.

And as you said, china is investing in production in other countries, they move in buy up land, develop it, or purchase already producing farms and then transport the commodities back to their own country. This insures supply and price stability for the chinese market, but also cuts out suppliers like argentina, and helps to keep global prices down.

 

[expatinowncountry]

Interesting graphs and discussion.

Also interesting to note that it confirms what a low base GDP was coming post 2001, hence you can understand the post growth figures.

Yeah, the "Kirchnner miracle" was half recover of the 30% GDP points lost in two years and the idle installed capacity. To really estimate average growth rate you need to estimate between two peaks (two consecutive maximum in the GDP series) and not between the bottom and a peak cause the average growth will depend very much on how hard the fall was.
Politicians know how to read their number for their own convenience.