The Economist: Argentina is one of the worst countries to invest

Argentina is one of the riskiest countries when it comes to trade in Latin America and the Caribbean. This is clear from the report “Populism and Politics: Operational Risk in Latin America”, produced by the intelligence unit of the English magazine The Economist.

With a score of 57 out of 100, the country ranks seventh in the ranking of the riskiest. The first place was obtained by Venezuela, with 86 risk points, followed by Nicaragua (65), Haiti (63) and Bolivia (63). On the contrary, neighboring countries took the lowest values ​​of the scale, such as Chile (25), Peru (37) and Uruguay (39).

“While our forecast for Latin America in 2021 is cautiously optimistic, Investors will need to prepare for these emerging risks. 2021 is another important election year for Latin America, with presidential elections in several major economies such as Ecuador, Peru and Chile, and midterm elections in major regional markets, including Mexico and Argentina, ”he said.

To determine risk, The Economist relied on three factors: political risk, economic risk and regulatory risks. In all categories, Argentina was the most mentioned country.

In the first point, the country stood out for presenting difficulties in terms of political efficiency. “Divisions within the ruling coalition exacerbate governance problems ”, work highlighted. On a risk scale of 1 to 25, Argentina received a score of 12 on this point.

However, the biggest risk facing Argentinian businessmen is in economic matters. “Failure to correct macroeconomic imbalances produces strong inflationary monetary adjustment,” he said. The problem was rated as “very serious” and the country scored 25 out of 25 risk points.

“With regard to the risk of foreign trade and payments, it is true that so far in Latin America there has been no significant sign of tariff or non-tariff barriers or of new capital or financial controls. exchange. (with a few notable exceptions such as Argentina, where currency controls were tightened in 2020) ”, Indicates the report.

In this regard, it was pointed out that the country faces difficulties related to foreign trade and payments due to the fact that the government is raising non-tariff barriers as part of the import substitution policy. This presents a “moderate” risk to investors, with a score of 9 out of 25 points.

Finally, with regard to the regulatory risks to which companies are subject, The Economist noted that in Argentina, the government “nationalizes strategic enterprises”, the country therefore presents a “high” risk with 16 points out of 25.

“Growing resource nationalism in the face of growing objections to large-scale mining, energy and agriculture projects also presents risks, in the form of removing incentives, increasing local content requirements and, in the process. extreme cases of total nationalization. The Argentine government, for example, tackled the idea in 2020 of nationalizing a struggling soy exporter. before backing off from local political and commercial objections, ”the report recalls, referring to the attempted expropriation of agro-exporter Vicentin.

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