Investing in turbulent times

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How business friendly is Argentina’s current environment? Ricardo Truppel at Baker & McKenzie explains

Trade and investment between India and Latin America has increased substantially in the past decade. A similar situation exists in Argentina where Indian companies are present in many sectors.

7But is Argentina’s current environment investor and business friendly? Argentina is open to foreign investments and foreign investors are treated by law as nationals. Yet, the country has not received positive coverage in the press over the recent past and facts on the ground do not help. Argentina has the second highest rate of inflation in the region, foreign currency reserves are declining even as exchange restrictions continue, and activity in certain areas is decreasing. All of this is, prima facie, not encouraging.

However, business and life goes on and history shows that the situation can change very fast. The past few decades have been marked by cycles of turbulence: from hyperinflation at the end of the 1980s to the big deregulation and privatizations in the 1990s; from a foreign debt crisis in the early 2000s to a successful 65% discount debt-restructuring a few years later. The past decade — dominated by the former-president Néstor Kirchner and his wife, current president Cristina Fernández — has seen government intervention increasing even as the economy has grown at an average of 6.3% per year. Elections are due in the last quarter of 2015 and as we enter into the last year of Fernández’s presidency Argentina is facing a slowdown.

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Ricardo Truppel is an of counsel at the Buenos Aires office of Baker & McKenzie.

Baker_&_McKenzie_logo (1)

Buenos Aires

Tel: +54 11 4310 2250

Mobile: +54 911 5114 7122

Email: ricardo.truppel@bakermckenzie.com

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