A macroeconomic view on Argentina’s current state

In Argentina, market volatility has been driven higher over the last 18 months due to rising debt, persistent inflation and a prolonged recession. In addition to these economic despairs, currency weakness and political uncertainty related to the upcoming presidential elections have investors on edge.

Tensions between politics, macroeconomic factors, and the markets demonstrate that Argentina is at an important inflection point.

Evident recovery drivers

In March, Argentina received its third instalment from its IMF package with the hope that the Argentine Central Bank sells more of its dollar reserves, pays down its debt, and boosts the currency's value. After the latest payment was released, and a booming harvest season began, the IMF again commended Argentine efforts.

Argentina's agriculture sector encourages much optimism given that in April, export sales boosted the peso by nearly 2 per cent at the start of the harvest. Dollar sales by corn and soy exporters, and their purchase of Argentine pesos, rose from an average of $60 million per day in March to a substantial $91.5 million in April.

Upon taking office, Macri lowered and removed export taxes imposed on key commodities...