Upon reflection, our experience in Argentina taught us a number of lessons related to the true state of political economy and macroeconomics in the country. It is no secret that Argentina has had a complicated and tumultuous history related to the consequences of its economic policies instituted by its political leadership. Argentina has defaulted on its debt twice since 2001 and has had limited access to the international capital markets since then. Moreover, high inflation, approximately 25% inflation each year, has also been a part of the Argentine narrative. Given these factors, we expected to see a much different political and economic climate than we observed. Below are our takeaways:
High inflation and Argentina’s tough economic climate is part of of Argentina’s narrative but does not define Argentina. When we toured the country, many of the individuals (everyday citizens, business leaders, politicians) all agreed that inflation and a more stable economic climate is a major goal for Argentina. However, this is not at the forefront of the national psyche on a daily basis. To us, Buenos Aires and Mendoza did not appear to be in a state of crisis and individuals proceeded with their daily life similar to countries with less severe economic crises. I think this was eye-opening for us as the picture of Argentina painted internationally does not always reflect the reality of everyday Argentina.
Optimism and change are a major theme throughout Argentina. The election of President Macri in late December has been met with a new wave of optimism throughout the capital city of Buenos Aires. During our company visits, business professionals expressed excitement about the possibility of a better environment for business in the country. Moreover, Argentina remains close to resolving its outstanding debt and many are looking forward to Argentina’s future participation in international capital markets.
The Macri Government has the potential to change the way Argentine government operates. Chief of Staff Marcos Pena spoke about opportunities to reign in fiscal spending and creating government budgets that provide more benefits to Argentine citizens. The overall goal is to spend money more efficiently moving forward. These type of policies are both business friendly as well as friendly to the individuals who also need more public services.
Looking back, our visit to Argentina reflects a country that appears to have a promising future. While Argentina does have considerable challenges, it should not be defined by them as the Argentina we saw reflected a more nuance picture. Our opportunity to be fully immersed in the culture, speak with major business leaders and government officials has allowed to see Argentina as it should be seen – a country with major potential to be a prominent international player once again.