Tailwind, headwind or crosswind?: the global panorama that Milei faces so that Argentina grows again

Tailwind, headwind or crosswind?: the global panorama that Milei faces so that Argentina grows again
Tailwind, headwind or crosswind?: the global panorama that Milei faces so that Argentina grows again

“The world could be better, but it is not so bad for Argentina’s prospects. What is expected from the Government of Javier Milei and his Minister of Economy is more endogenous: the sanction of the Bases Law,” said the director of the DNI consultant, Marcelo Elizondo

Beyond the exchange rate volatility of the last week, caused by the abrupt drop in interest rates decided by the Government and the delay of the Bases Law, it is worth asking whether or not the world accompanies the official intention to grow and integrate again. to international markets.

To the traditional concepts of “tailwind” – which describes favorable terms of trade and low interest rates – and “headwind” – the opposite – is added one that, for several experts in international economics, applies to this situation. Argentina: crosswinds.

In this way, the analysts consulted by Infobae They considered that, despite several geopolitical conflicts that plague the world (from the war in the Middle East to the continuity of the conflict between Russia and Ukraine, through the tension between China and the United States) global growth did not stop and safe haven assets , like gold and oil, did not return to the records of other international crises.

Daniel Marx He said that “in terms of the environment towards emerging markets there is no headwind, but not so much tailwind either. There are possibilities of debt issues from emerging markets, but Argentina still lacks elements such as some laws, demonstrating how the future fiscal program is going to go, and more governance.”

Daniel Marx believes that there is no headwind

There are possibilities of debt issues from emerging markets, but Argentina still lacks elements such as some laws, demonstrating how the future fiscal program will go and more governability (Marx)

In any case, the former Secretary of Finance stated that, despite the increase in debt maturities in foreign currency in 2025, “the Government would not have to make a forced exchange due to current conditions, but it needs to generate advances so that the spread Argentina drops to single digits.”

Marcelo Elizondodirector of the consulting firm DNI, added that “I don’t see wind from any side, it could be that it is neutral, because the international prices of raw materials have moderated versus what was expected last year and on the financial level there is not as much volatility due to geopolitical issues.”

“Given the clashes in several important enclaves, there should be greater risk aversion, but that is not happening; among other examples, the price of oil is not flying. And interest rates in the United States, although it still seems that they are not going to go down, there is no upward trend either,” explained Elizondo.

“I don’t see wind from anywhere, it could be neutral, because raw material prices have moderated versus what was expected last year and on a financial level there is not as much volatility due to geopolitical issues” (Elizondo)

“The world could be better, but it’s not that bad for Argentina’s prospects. What is expected from the Government is more endogenous: the sanction of the Bases Law,” Elizondo expanded.

For its part, Luis Palma Cane He stressed that “there is no tailwind or headwind, but rather a crosswind. “The Government lurches in rhetorical terms due to President Milei’s expressions.”

The finance specialist maintained that “the United States is not going to lower interest rates further as long as inflation does not subside and Europe is always behind. For their part, raw materials are going to run according to what happens with the dollar, which continues to appreciate and that implies a ceiling for raw materials.”

“Raw materials are going to fluctuate according to what happens with the dollar, which continues to appreciate and that implies a ceiling for raw materials” (Palma Cané)

At the same time, José Siaba Serrate observed that “the market is waiting for a second stage of the Government plan after having achieved a strong fiscal adjustment and a greater and faster drop in inflation than expected. Now what investors and the IMF want to see is if the Bases law is approved and if there is an agreement with the provinces.”

“The market is waiting for a second stage of the Government plan after having achieved a strong fiscal adjustment and a drop in inflation greater and faster than expected” (Siaba Serrate)

“That is where progress needs to be made so that investors support Argentina more explicitly. In the external context, what is important is a slowdown in the pace of dismantling quantitative easing and the certainty that, even if they do not go down, long rates in the United States are not going to go up,” explained Siaba Serrate.

Argentina is still in another galaxy in terms of financial integration with the markets (Siaba Serrate)

In any case, the analyst clarified, “Argentina is still in another galaxy in terms of financial integration with the markets; We have to see in the short term what happens with the swap with China to see how this story continues.”

“The market supports but wants to see more progress in fiscal and exchange matters in the medium term,” an Argentine expert from an international investment fund (EFE) told Infobae.

Anonymously, an important Argentine executive of a United States investment fund added that “the market supports but wants to see more progress in fiscal and exchange matters in the medium term.”

In any case, the source admitted that it will not be easy for there to be large short-term investments, because “many people were burned in the Macri government and many Wall Street traders who had Argentine debt lost their jobs.”

“No one is going to take a risk again when there are assets that perhaps generate less return but also less uncertainty. “You know that you are going to gain 10% instead of 20%, but you also know that you are not going to lose everything again as happened in 2019,” the Wall Street expert added, distressed.

 
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