Harsh diagnosis of the Argentine economy by two key figures in US finance.

The economic situation in Argentina was going from bad to worse. The departure last Saturday of the Minister of Economy Martín Guzmán (he was in office for 30 months) and the entry of Silvina Batakis – who has not yet presented her final team – have caused greater concern. There are many rumors for and against, credit risk rating agency Moody’s and bank JP Morgan, for example, are issuing severe warnings about the outcome the whole move could have.

For JPMorgan, Argentina faces a complex situation of high inflation. And for Moody’s, the new economic management, in its voice, will have to face “serious macro problems”.

According to Gabriel Torres, head of sovereign risk analysts for Argentina at Moody’s, “Argentina’s new economy minister, Silvina Batakisit will face serious macroeconomic and credit problems in an increasingly complicated political context in the country “.

For the expert, “the high levels of inflation, the decline in international reserves, the increase in the debt in pesos and the need to reduce the fiscal deficit to achieve the objectives agreed with the International Monetary Fund (IMF) represent great challenges that the new minister will have to face.

Torres, in dialogue with LN +, spoke of inflation, saying that six months ago it was “a problem that has been solved”. However, now, in his opinion, it gets worse: “In the past three months of annualized inflation, Argentina is close to 100%. And if 10% is expected next month, it will be nearly 110%, “he warned.

According to the specialist, the government is faced with a dilemma between “have a huge recession or a big shock all at once“.” Many times the market forces you and forces you to do something you didn’t want to do, but that’s where he considers where he’s going, “he concluded.

A few days earlier, JP Morgan bank noted in a report that “as economic history shows, political crises appear as necessary conditions for very high inflation / hyperinflation scenarios ”.

“In October we stressed that macroeconomic imbalances required a stabilization program, although the lack of political will made such an approach extremely unlikely,” said JP Morgan analysts Diego Pereira and Lucila Barbeito who signed the document.

In addition, the bank indicated it “macro imbalances have become more challenging, despite the IMF’s sensitive approach in helping the country avoid default; moreover, the increases in the prices of energy and agricultural products have exacerbated upward inflationary pressures, factors that add anxiety to the policy ”.

In conclusion, JP Morgan pointed this out “The way forward seems shaky as we approach the election year“.

The arrival of Silvina Batakis

For Torres, Batakis faces a difficult second half and “will have to face serious macroeconomic and credit problems” in a political context marked by the ruling party.

What are the main problems that the new Minister of Economy will have to face: “The high levels of inflation, the decline in international reserves, the increase in the debt in pesos and the need to reduce the fiscal deficit to achieve the objectives agreed with the International Monetary Fund (IMF) “, he concluded.

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