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The Latin American Marketplace: The Argentine Perspective
Last week, Alium’s Mike Daniell was delighted to attend the British Argentine Chamber of Commerce Networking Day and gained a new view on the Latin American marketplace, with some notable speakers including Diego Guelar – Argentine Secretary of International Relations (formerly US Ambassador), Fiona Mackie – Regional Editor, The Economist and Jimena Blanco – Head of Americas Verisk Maplecroft.
Finance, Falklands And The Future
With the left-leaning de Kirchner administration swept away in the recent Argentine presidential elections (to be replaced by Mauricio Macri on 10th December), there were a number of developments and topics spoken about that were useful to both a local Latin American audience and an international perspective too for those seeking to access this potentially lucrative marketplace:
1) Export Taxes
These have historically been at 35%, which has clearly slowed trade significantly. The new administration under Macri will abolish these within 2 weeks in order to stimulate foreign trade next year.
2) Commonality
Currently numerous regional dialects and even currencies exist (US$ is used because of this). Macri will make laws around both a common language and common currency to ensure uniformity, helping to restore economic and cultural confidence.
3) South America
As the second largest economy and country in South America, it was clear that Argentina knows the importance of its relationships with regional leader Brazil. Historically it has always been competitive between the two but the talk was of a “cessation of ‘rivalry’ (hostilities) with Brazil and the building of a closer working partnership. The view of South America as areas of common interest, as per the EU model, and regardless of historical differences was one that was spoken of frequently.
4) Free Trade Agreement with EU
But in relation to the EU, and regardless of the faltering €uro or impending possible “Brexit”, speakers, including Diego Guelar, spoke of the importance of a free trade agreement with the EU and singled out the UK in particular for supporting this proposal.
5) Cancel 2013 Trade Agreement with Iran
At the other end of the spectrum there was also much talk of cancelling the trade agreement with Iran which is seen as internationally damaging in terms of international trade, especially when trying to normailse relations with major global powers such as…
6) The US
Where it is important to increase import / export activity. Similarly, but at a much more developmental stage are relations with…
7) China
The focus of discussion around the Asian powerhouse was how to become an effective trading partner, with a focus on infrastructure investment, such as has been achieved in UK
8) UK and Falklands
As can sometimes be at these events, the Falklands was the elephant in the room. However, word from the new government sources is to put to bed once and for all the Falkland Issue. It is seen as more damaging to the overall aim and potential bigger picture of trade and access to Europe.
9) Remove Impositions on Imports
The approach for the future is to adopt much more a policy of if goods are needed then allow imports, especially to expand industries such as Motor, Pharma, Infra and Energy.
Although the feeling at the event was very positive for the future, there are still some significant challenges for the Argentine economy that need to be tackled. Inflation has been running at 25%, is forecast at 35% next year and won’t be down until single figures until 2019. Because of this and other issues, Argentina doesn’t have access to international markets right now and fiscal tightening by the (current) government means there may be a recession in 2016…but it’s generally agreed the tightening is required……sound familiar?
It will be an interesting one to watch and I look forward to hearing the progress of the new government from our Latin American team in the new year.
