Argentina’s recent debt default -consequencies

The government of Argentina has defaulted its public debt – yet again. It is bound to have unfavourable consequences for the people of Argentina, who are likely to see their currency lose value, and many will lose their jobs.

Devaluation will make Argentinian products more competitive. It will increase demand of the country’s grapes – which is now depressed due to a slowdown in exports of Argentine wine as a consequence of the overvalued peso. It is also expected to improve the margins for hotels, which has US Dollar rates and peso costs. Timber? The same again. Real estate? With the expectations that a viable economic and political program will generate, these will revert to reflect the intrinsic value of properties.
“The current political situation in Argentina is also looking positive: Mrs. Kirchner’s, the country’s president’s popularity is at an all-time low, she can’t be re-elected, and doesn’t have the power to nominate her successor” Steve Rosberg, an Argentinian resident stated. Rosberg goes on to state that “as a result, and as a reaction of her leftist rhetoric and the current crisis, the four most probable candidates – those who have real chances of being elected – are all market friendly, and of a centre to centre-right inclination. They are all likely to make the necessary reforms to get out of this default, and to pursue foreign investment. We believe they don’t really have a choice, except in a matter of degrees. It has been a slow and painful decade with the Kirchners, who are leaving the country pretty much in the same condition they found it in 2003. Now, like then, there will be great opportunities to invest in Argentina”.