Argentina’s economy is heading for a crisis. Inflation is above 100% and rising; the government runs an unsustainable fiscal deficit; farming, the main export sector, is suffering the worst drought on record; and general elections this year are causing political instability.
No wonder stocks are suffering. The local Merval stockmarket index is down by 60% in US dollar terms since its 2018 high. That’s awful news for existing shareholders but a great opportunity for us: despite its short-term challenges, Argentina’s economy has compelling medium-term prospects. A rebound in its world-class energy, mining and agricultural resources will kick-start an economic boom in 2024. The country also has extraordinary potential in technology and finance.
Most importantly, the looming showdown with economic reality is about to impose discipline on Argentina’s economic model, finally allowing the country to fulfil its potential. The potential rewards for brave investors buying now are massive.
Steak and malbec on the cheap
I don’t want to downplay the severity of the economic challenges currently facing Argentina. In fact, they are part of the bullish story because the looming crisis is the only reason we can buy in cheaply. The most visible problem is inflation. Paying for
