ARGENTINA: The End of the Recession & more – 19th Dec 2024

¡Buenos días from Greenway Parks! This is the Rorshok Argentina Update from the 19th of December twenty twenty-four. A quick summary of what's going down in Argentina.

Let’s start with some positive news: Argentina’s economy has officially exited its recession. Between July and September of this year, GDP grew almost 4% compared to the previous quarter, driven by increased consumer spending, capital investment, and strong agricultural and mining exports. However, some sectors like manufacturing and construction remain in decline.

That said, despite this rebound, challenges persist, including widespread poverty and the need to lift currency controls to attract more foreign investment. Looking ahead, this will be key as the president prepares for the twenty twenty-five midterm elections, where economic recovery could bolster his political standing.

Like every month, inflation figures are in: November saw inflation continue its downward trend, rising just 2.4%—the lowest monthly rate in months and below market forecasts. This marks the fourth straight month of slowing inflation, though the annual rate remains high at 166%.

Also in financial news, the gap between the official and parallel dollar exchange rates has narrowed to just 4%, a dramatic improvement from over 100% last year. This shift is largely attributed to a higher supply of US dollars—boosted by record agricultural exports, an energy trade surplus, and a tax amnesty program—alongside reduced demand for the dollar due to low devaluation expectations and government interventions.

While the Central Bank has actively worked to control this gap, economists warn that seasonal pressures, such as holiday spending and increased tourism, could disrupt this trend later in December.

Freelancers will be happy to hear that the Central Bank has raised the annual limit for keeping dollars earned from exporting services without converting them to pesos. The cap has increased from 24,000 to 36,000 dollars per calendar year, giving freelancers more breathing room to hold onto their earnings in foreign currency. Any income exceeding the limit still needs to be brought into the country and exchanged within five business days.

To wrap up on economics, the International Monetary Fund, or IMF, has laid out two key conditions before approving any additional funds for Argentina beyond its existing forty-four billion dollar debt: Congress must approve new borrowing and the government needs to implement structural economic reforms, including lifting currency controls. The IMF insists this is key to ensuring market stability, though Argentina believes IMF funds are needed first to achieve this. President Milei and his team aim for a deal by the IMF’s April twenty twenty-five Spring Assembly.

In other news, remember Edgardo Kueider, the senator who was arrested at the Paraguay-Brazil border with over 200,000 dollars in undeclared cash? Well, the Senate deemed him morally unfit in a 6-60 vote, despite his protests that the expulsion was unconstitutional and based on presumptions. Kueider denied ownership of the money and blamed his secretary instead. He is currently under house arrest in Asunción, Paraguay, and faces a lengthy investigation into money laundering and smuggling.

But that’s not the end of the story. The public rift between President Milei and Vice President Victoria Villarruel deepened after Kueider’s expulsion. Milei argued the session was invalid because Villarruel, as acting president during his trip to Italy, shouldn’t have presided over the Senate because it’s a violation of the separation of powers. Villarruel countered that the formal transfer of presidential authority happened after the session ended.

Since we’re on the trip to Italy, Milei sparked controversy after meeting with Giorgia Meloni, the Italian Prime Minister, on Saturday the 14th in Rome. This marked their fifth official meeting, which is surprising in itself, but the backlash came when the media revealed that Milei and Karina, his sister, were granted Italian citizenship.

Milei defended the move saying he is 75% Italian due to his ancestry, but critics argue that his fast-tracked approval highlights inequities in Italy’s citizenship process, where children of foreign parents face significant obstacles even if they’ve lived in the country their whole lives.

Another controversy: the government is investigating several leading prepaid health providers for suspected cartel behavior following coordinated fee hikes. The National Commission for the Defense of Competition has initiated proceedings against seven healthcare companies, including Galeno, Medifé, and Swiss Medical, as well as their umbrella association, UAS, and its former president, Claudio Belocopitt.

The companies now have twenty working days to present evidence to defend themselves, with potential fines of up to 30% of their business volume if found guilty of monopolistic practices.

Speaking of business, the government has approved the Vaca Muerta Sur oil pipeline, a massive three-billion-dollar project led by YPF, the state-owned energy company. Touted as the largest private investment in Argentina’s history, the pipeline will transport crude oil from the Vaca Muerta shale formation in the Neuquen province to the Punta Colorada port on the eastern coast of the Río Negro province.

YPF, alongside major players such as Chevron, Pluspetrol, and Shell Argentina, are backing the project. Once operational, specialists expect it to be a cornerstone in achieving Argentina’s target of fifteen billion dollars in annual oil export revenue.

Meanwhile, Rio Tinto, the Anglo-Australian mining giant, has announced a 2.5 billion dollar investment to expand its Rincón lithium project in the Salta province, boosting production from 3,000 to 60,000 tons annually by twenty twenty-eight.

From Salta to Buenos Aires, the American multinational JPMorgan plans to hire 1,500 new employees at its Buenos Aires corporate hub over the next five years, expanding its operations in technology, finance, legal services, and more. The bank sees Argentina as a strategic location due to its skilled workforce, English proficiency, and time zone alignment with the US. This move will add to JPMorgan’s existing 3,500 employees in the country.

Also related to the US: Donald Trump has extended a personal invitation to Milei to attend his inauguration on the 20th of January in Washington, D.C. While Milei is already committed to attending the World Economic Forum in Davos and traveling to Israel around the same time, his administration is adjusting his schedule to accommodate Trump’s invitation.

In ideological alignment with Trump, Milei has lowered the minimum age for gun ownership from twenty-one to eighteen through an executive decree, bypassing Congress. The move is part of a broader push to loosen firearm regulations, including measures to streamline gun licensing and legalize unregistered weapons. His administration argues the change aligns with the country’s age of majority, but human rights groups and security experts highlight the heightened risks for young people, including impulsive behavior, accidents, and suicide.

On that topic, the investigation into Liam Payne’s death at a Buenos Aires hotel has intensified, with two new suspects charged and others summoned for questioning. Rogelio Nores, a businessman, is accused of abandonment leading to death, and Ezequiel Pereyra, part of the hotel staff, is suspected of supplying drugs to Payne.

In other tragedies, Beatriz Sarlo, the renowned Argentine essayist and cultural critic, sadly passed away on Tuesday the 17th at the age of eighty-two, following complications from a stroke. Born in Buenos Aires in nineteen forty-two, Sarlo studied literature at the University of Buenos Aires and rose to prominence as a sharp literary analyst and public intellectual. Her extensive and celebrated career includes co-founding the influential magazine Point of View or Punto de Vista during Argentina’s military dictatorship, as well as authoring works such as Scenes from Postmodern Life, Borges: A Writer on the Edge, and many others.

To end on a lighter note: on the 11th of December, twenty thirty, FIFA announced that Argentina will host one of the opening matches of the next World Cup. Claudio Chiqui Tapia, the AFA President, and Karina Milei, the Presidency Secretary, temporarily paused their dispute over the privatization of Argentine football to attend FIFA’s announcement in Paraguay. Opening games will take place in Argentina, Uruguay and Paraguay to commemorate the 100th anniversary of the inaugural World Cup, which was held in Uruguay in nineteen thirty.

Aaand that’s it for this week! Thank you for joining us!

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¡Nos vemos la próxima semana!