5. ARGENTINA HISTORY
Argentina has a history of chronic monetary, economic and
political problems
In 1810, it declared independence from the Spanish
Government
No stable government ruled until 1862
Late 1800’s steady growth and a booming economy due to
beef exports to Europe
1890 first large economic downturn due to budgetary
problems by an incompetent government
6. ARGENTINA HISTORY
Power traded between Presidents and military dictators
In 1902, Argentina followed a Gold Standard that had a 100%
reserve ratio
In 1914, the gold standard was abandoned and brought back
in 1927 to be abandoned again in 1929
In 1945, inflation became a big problem
Unresolved political pressures resulted in the government
spending more than it had taken in taxes, causing inflation
7. ARGENTINA HISTORY
In the 70’s there was triple digit inflation
Early 90’s President Menem stepped in with a reform
He pegged the peso to the dollar
Inflation quickly fell to below 4%
8. GLOBAL PRESENCE
• Argentina is one of the largest economies in Latin America.
• It is a leading food producer with large scale agricultural and
livestock industries
• World largest beef and soybean exporters
• Leading producer of sunflower seeds, yerba mate, lemons
& soybeans oil
9. ARGENTINA ANALYSIS
• Republic Government
• President and Vice President
• Elected by popular vote for four
year terms and can be reelected
once.
• Current president Mauricio Macri
began 12/10/15
• 2015 Govt debt (pct. Of GDP):
49.5%
• 2015 GDP per capita (PPP):
$22,459
• Moody’s credit rating: Caa1
• 2015 exports $56.75 billion
• 2015 imports $59.78 billion
• Most Argentines are primarily of
European descent
• Believe in hierarchy
• Roman Catholicism acts as the
official state religion.
• The EU is Argentina largest trade
partner after Brazil
• Brazil, China, United States,
Chile, Venezuela, India, Spain,
Canada , Algeria and Netherlands
• Argentina entity is Mercosur
Political
Legal
Economic
Financial
Socio-Culture
Trading
Partners/
Agreements
14. Bail Out Plan
What could Argentina have done differently
• Fiscal: cut taxes early, accept more drastic budget cuts to
avoid inflation
• Monetary: dollarize, allow banks to issue own notes, default
on public debt early
15. Bail Out Plan
What to do in the Short-Term
• Dollarize Now
• Implement tax cuts
• Revamp banking system to promote confidence
• Set floor price for default debt
16. Bail Out Plan
What to do in the long term
• Examine structure of law
• Simplify tax strategy
• Improve Federal-Province relationships
• Reduce unnecessary government spending
• More flexible labor laws
• Improve health care
17. Bail Out Plan
International Policy Implications
• Determine comprehensive view on handling financial crisis
• Examine US laws on foreign seizure
• Improve IMF recommendations
• Property rights as related to prosperity
The heads of powerful families command widespread respect and responsible to care for others in terms of security, jobs and to maintain personal and family honor.
Mercosur is an economic and political agreement between Argentina, Brazil, Paraguay, Uruguay and Venezuela. A full customs union, Mercosur's purpose is to promote free trade and the fluid movement of goods, people, and currency. Mercosur's primary interest has been eliminating obstacles to regional trade, such as high tariffs and income inequalities
The Gross Domestic Product (GDP) in Argentina was worth 537.60 billion US dollars in 2014. The GDP value of Argentina represents 0.87 percent of the world economy. GDP in Argentina averaged 177.72 USD Billion from 1962 until 2014, reaching an all time high of 614.38 USD Billion in 2013 and a record low of 18.27 USD Billion in 1963.
Bankruptcies reached record levels
From 1998-2002:
Real GDP fell 28%
Inflation went from negative levels to 41%
Exchange rate fell from 1 Peso/$ to 4 Pesos/$
Unemployment increased from 12.4% to 23.6%
Poverty rate rose from 25.9% to 57.5%
Real wages fell 23.7% in 2002
Real supermarket sales fell 26% in 2002
Interest Rate
The benchmark interest rate in Argentina was last recorded at 36.88 percent. Interest Rate in Argentina averaged 67.38 percent from 1979 until 2016, reaching an all time high of 1389.88 percent in March of 1990 and a record low of 1.20 percent in March of 2004.
Bankruptcies reached record levels
From 1998-2002:
Real GDP fell 28%
Inflation went from negative levels to 41%
Exchange rate fell from 1 Peso/$ to 4 Pesos/$
Unemployment increased from 12.4% to 23.6%
Poverty rate rose from 25.9% to 57.5%
Real wages fell 23.7% in 2002
Real supermarket sales fell 26% in 2002
Inflation Rate
The inflation rate in Argentina was recorded at 40.50 percent in April of 2016. Inflation Rate in Argentina averaged 202.25 percent from 1944 until 2016, reaching an all time high of 20262.80 percent in March of 1990 and a record low of -7 percent in February of 1954
Bankruptcies reached record levels
From 1998-2002:
Real GDP fell 28%
Inflation went from negative levels to 41%
Exchange rate fell from 1 Peso/$ to 4 Pesos/$
Unemployment increased from 12.4% to 23.6%
Poverty rate rose from 25.9% to 57.5%
Real wages fell 23.7% in 2002
Real supermarket sales fell 26% in 2002
the USDARS gained 4.89 or 54.23 percent during the last 12 months from 9.02 in June of 2015. Historically, the Argentinean Peso reached an all time high of 15.84 in February of 2016 and a record low of 0.98 in January of 1992.
In recent times the official exchange rate hovered around 3 pesos per United States dollar from 2002 to 2008, was around 4 pesos from 2009 to 2011, surpassed 6 pesos in November 2013, sat at 6.5 pesos per dollar during December 2013. As of October 2014, the exchange rate was about 8 pesos per dollar, by February 2015, it was 10 per USD, and by December of the same year, 13 pesos per USD, after a record of 14
Bankruptcies reached record levels
From 1998-2002:
Real GDP fell 28%
Inflation went from negative levels to 41%
Exchange rate fell from 1 Peso/$ to 4 Pesos/$
Unemployment increased from 12.4% to 23.6%
Poverty rate rose from 25.9% to 57.5%
Real wages fell 23.7% in 2002
Real supermarket sales fell 26% in 2002