Debt and inflation. Warnings both internal and external to Argentina always revolves around these two variables. The Davos Economic Forum was no exception and also underlined the risks that the country will have to face in this sense: sustained inflation and the debt crisis.
He also identified other factors, such as the proliferation of illicit economic activities and the “major raw material supply crises”. These concepts emerge from the Global Risks 2023 report presented this Wednesday, before the start of the annual session of the Forum, which will take place between 16 and 20 January in the Swiss city.
Inflation, debt, high interest rates and trigger risks a “prolonged recession” in most developed and emerging countries, they are at the top of the concerns of the business community gathered in Switzerland.
but inflation “fast and sustained” It is not a unique and priority problem for Argentina, but it is “global concern”Y one of the top five risks for the next two years in the 89 countries examined in the document.
“Today governments and central banks, led by developed markets, especially the United States of America, the Eurozone and the United Kingdom of Great Britain, are walking a tightrope between managing inflation without triggering a deep recession or prolonged, e protect citizens from a cost-of-living crisis while debt service charges are historically high,” he warns.
Further, the document states: “It was classified as the main threat in several G20 countries, including Brazil, South Korea and Mexicoalthough inflationary pressures have hit both developed and developing economies.” And in that sense, he adds “inflation rates have exceeded 80% in Argentina and Turkey, while Zimbabwe, the Bolivarian Republic of Venezuela, Lebanon, the Syrian Arab Republic and Sudan recorded triple-digit inflation.”
He also noted that some emerging and developing markets “are feeling the effects of monetary policy tightening and deteriorating economic conditions sooner and more acutely”.
“A widespread global recession it could moderate the cost of living and limit interest rate hikes this year, but there is a higher risk of a short-term balance-of-payments crisis, coupled with a medium- to long-term credit crunch,” he said. added.
In this context, he warned that “the major emerging markets that present a higher risk of default include Argentina, Egypt, Ghana, Kenya, Tunisia, Pakistan and Turkey”.
And this is so, according to the report, due to the maturities of Argentina’s private debt they will start to be paid substantially in 2024 -after the debt conversion carried out in 2020-, in an economy with high inflation and exchange controls.
For this reason, the report suggests encouraging the private sector to participate in debt restructuring”through a variety of mechanisms, including the issuance of new bonds with stronger legal protections, loss repayment commitments and value recovery tools, which would allow private creditors to benefit from developments increase in debtor countries in the futuresuch as GDP-related instruments in Costa Rica, Argentina, Greece and Ukraine”.
Regarding the metals market, the document indicates that “several developing and emerging markets have become net beneficiaries of this growing interest from both the public and private sectors, including Indonesia, Morocco and the lithium triangle of Bolivia, Argentina and Chile”.
However, he argued that those countries “They had to walk a tightrope while world powers exercise control through trade, investment and technological ties and seek to limit the access of rival states”.
NS
Source: Clarin
