An uneasy recovery
Argentina is coming out of crisis, but few investors have noticed. Those that have can do little to profit from their knowledge. But there's a long way to go and the aspirations of the 1990s are unlikely to be fulfilled.
SOMETIMES IT'S GOOD to be ignored. Last year, when delegates from around the world flew to the annual meeting of the Inter-American Development Bank in Fortaleza, Brazil, the situation in Argentina was very much on their minds. The country had gone through a chaotic default and devaluation, and the resultant social, political and economic upheaval was enormous. Moreover, while many of the delegates had seen the crisis coming, none of them had foreseen just how bad the situation would get: wholesale violation of contracts and property rights, and crime, poverty and unemployment soaring to unprecedented levels.
This year, for all that Argentina seems well set on a steady growth path, the country has largely fallen off the radar screen. The default hysteria has long gone: in the fourth quarter of 2002 Argentine Brady bonds saw just $638 million of trading volume, down from $18.24 billion a year earlier. Five years of recession have resulted in a substantial rise in Argentina's unused industrial capacity, meaning that foreign companies have little reason to invest there. And as Argentines prepare to elect a new president in May, the transition - though hurried - seems likely to be relatively smooth, and unlikely to generate ominous headlines.