top of page
Writer's pictureFTT Creations

Economist: Argentina is among the worst economies to invest

The international magazine The Economist was lapidary with Argentina in its recent work on investment risk in Latin America in the face of the measures taken by Covid-19. In the report entitled "Populism and politics: operational risk in Latin America, the country was ranked among the riskiest to invest, with 57 points out of 100.


The report places Argentina in seventh place, surpassed by countries like Venezuela , which obtained 86 points; Nicaragua , with 65 and Haiti and Bolivia with 63 each. At the other extreme are Chile, Peru and Uruguay .


Latin America suffered some of the highest death rates and one of the most pronounced recessions in the world in 2020 in the face of the coronavirus pandemic . In 2021, the immediate focus is on addressing the pandemic, launching vaccines and helping economic activity return to pre-pandemic levels. But this will have lasting repercussions. There will be economic scars for the investment.


And in that sense, to determine the level of risk that the investment will suffer, the publication focused on three factors political risk, economic risk and regulatory risk . In all three points, Argentina is at the top of the ranking.

On political risk , the publication spoke of the electoral context that some countries will experience in 2021 including Argentina. In this item and on a scale from 1 to 25, Argentina received 12 points.


The pandemic poses obvious risks to both the security environment and political stability, and weaknesses in political effectiveness in Latin America will hamper the ability of governments to address these challenges, which subdivides this item into three security, political stability and government effectiveness.


In all three, Argentina is among the highest. Regarding security Argentina was ranked number 8. In terms of political stability, the country was ranked 4, with more than 40 points. And when it comes to the effectiveness of the Government, it was ranked 8 again.

According to the report, the country's greatest danger lies in the effectiveness of the government as divisions within the ruling coalition aggravate governance.


Deep discontent with the region's political leaders poses another major risk that opposition groups could come to power and cause a significant deterioration in the operating conditions of investments .


2021 is an important electoral year for Latinos, with presidential elections in several large economies such as Ecuador, Peru and Chile, and midterm elections in key countries such as Mexico and Argentina.


Regarding economic risk , the report in the international magazine pointed out that the greatest risk faced by entrepreneurs is related to the lack of correction of macroeconomic imbalances, which produce a strong inflationary monetary adjustment. This problem was considered very serious and Argentina received the worst score: it obtained 25 points out of 25 risk points.


The document also mentions the difficulties related to foreign trade and payments, since the Government raises non-tariff barriers as part of the import substitution policy. This represents a moderate risk and the country collects 9 points out of 25.


Regarding regulatory risks, the Economist pointed out that the government nationalizes strategic businesses. Growing resource nationalism amid growing objections to projects in the mining, energy and large-scale agriculture sectors presents risks in the form of removal of incentives increased local content requirements and, in extreme cases, nationalization total. For the publication, the risk is once again high and placing Argentina in position number 16, out of 25.

11 views0 comments

Recent Posts

See All

Comments

Rated 0 out of 5 stars.
No ratings yet

Add a rating

Top Stories

bottom of page