May 17, 2019
1. Argentina reclassified as an emerging market
Morgan Stanley Capital International (MSCI), a global reference point in the compilation of indices that are used to make investment decisions, confirmed that Argentina will join the likes of Brazil and Colombia in the “Emerging Market” category, a change from its previous status as a “Frontier Market” beginning May 28th. The reclassification means that the eight Argentine companies listed on Wall Street will receive an injection of funds from institutional investors who determine disbursements based upon the indices created by MSCI. The reclassification allows businesses to access better financing conditions, which could help unblock investment projects.
2. Inflation begins to decline, but productive capacity compared to actual production falls
Argentina’s national statistical institute announced that inflation in April reached 3.4%, a significant drop from the 4.7% recorded in March. Inflation has accumulated to a total of 15.6% since the beginning of 2019, and55.8% year over year. Prices increased across all sectors: 6.2% for clothing, 4.6% for home goods, 4.4% for transport and 4.1% for restaurants and hotels. At the same time, the country’s productive capacity compared to actual production fell to 57.7% in March, compared to 66.8% in the same month last year.
3. U.S. ambassador states that relations with Argentina are at their “best point in decades”
At the U.S. Chamber of Commerce in Argentina (Amcham) Business Summit, U.S. ambassador to Argentina Edward Pardo supported the measures taken by President Mauricio Macri to fix the economy. “I want to reiterate the fact that the U.S. government supports Argentina because this is the right path,” stated Pardo, “We must be patient because the transformation and modernization of an economy takes time and there will always be challenges. Today, relations with Argentina are at their best point in decades,” he continued. With that in mind, he clarified that Argentina has undertaken important reforms and has made difficult decisions. These statements add to U.S. President Donald Trump’s words of praise during a call with his Argentine counterpart last week.
4. Campaign finance law approved
The Argentine Chamber of Deputies definitively endorsed the “Political Party Financing Law” which establishes a series of transparency measures to financial support for campaigns, and allows businesses to contribute to political campaigns, which were prohibited towards the end of 2009. Additionally, the law requires registration for polling and survey businesses, which will come under the auspices of the National Electoral Chamber (CNE). On the other hand, experts will join the CNE to audit political parties’ claims and ensure transparency. With the approval of this project, the Argentine government achieved one of its major political goals for the year.
5. Closer to the deadline for political alliances, the electoral stage begins to take shape
As the deadline for political parties to form coalitions approaches, the electoral stage for October’s national elections has begun to show its final form. After a 15-year absence, former President Cristina Fernández de Kirchner attended the Partido Justicialista’s political summit and attempted to build a united Peronist front. Nevertheless, despite her support among some Peronist factions, others, especially in Argentina’s interior provinces continue to look for alternatives. Sergio Massa, a key Peronist figure opposed to Kirchner and Salta Governor Juan Manuel Urtubey both confirmed their desire to run for president. On the other hand, the Macri-allied Unión Cívica Radical (UCR) President and Mendoza Governor Alfredo Cornejo once again questioned the party’s support for President Macri, making it clear that the UCR aims to take a bigger role in the national government’s decision-making. Interior Minister Rogelio Frigerio even admitted to the possibility of Macri going through a primary election to define the Cambiemos coalition’s presidential candidate, stating that the president will always have Argentina’s interests in mind, no matter what that entails.