According to analysts at ABN AMRO, among the ‘big six’ Latin American economies, Argentina is the only country which looks to be heading for a further contraction in 2020.

Key Quotes

“The electoral victory by the left-wing Peronist presidential candidate Fernandez at the end of October delivered an even greater blow to the already low consumer and producer confidence. The new Minister of Economy Martin Guzman has announced that he is in negotiations with the IMF and intends to talk to bondholders with a view to agreeing a restructuring of foreign debt.”

“Whether these negotiations will be successful is highly uncertain, however, and there are major fears that the result will be a chaotic debt restructuring process with the potential for considerable debt cancellation. Although capital controls have done something to halt the slide in the currency in the recent period, the CDS spreads are still above 10,000 and credit rating agencies have assigned the lowest possible rating to the country.”

“Accordingly, the economic outlook is highly uncertain; at this point in time, we are forecasting a 2% contraction in GDP in both 2019 and 2020, with a slight recovery in 2021.”