Ukraine war will undermine Argentine economic outlook
Wednesday, March 23, 2022
Significance
The impact of the Russia-Ukraine conflict is a mixed picture for Argentina. High agricultural commodities prices will boost export earnings, but a higher energy import bill could offset this. Higher food and energy prices will drive inflation and complicate plans to reduce energy subsidies.
Impacts
- The government will not succeed in reducing inflation, expected to reach a 30-year high this year.
- The fiscal target agreed with the IMF will not be met, as higher energy prices undermine efforts to reduce subsidies.
- The possibility of energy shortages will threaten the economic recovery.
- The global energy crisis could increase the attractiveness of investments in the domestic energy industry.