Argentina should be in a position to emerge from its recession, says PWC

According to a report recently released by PriceWaterhouseCoopers LABC, Argentina - South America's second largest economy - should be in a position to emerge from its recession due to the established reforms adopted over the past decade.
The LABC findings are part of a series of in-depth analyses published by PriceWaterhouseCoopers to provide U.S. multinational corporations with a better understanding of key Latin American economies and industry sectors and the ever-changing investment climate of that region.
The Argentina Now study shows how structural reforms implemented since 1989 have helped the Argentine economy achieve relative stability despite world-wide economic turmoil.
These measures include:
- Adherence to a currency board system
- Opening of product and capital markets to international competition
- Privatisation of inefficient state companies
- Implementation of a privately managed, funded social security system
- Deregulation of activities that had been under state control.

These reforms resulted in eight years of economic growth until a series of international economic crises hit, including the recent devaluation of the Brazilian real.
Eduardo Pupo, managing partner of the Latin American Business Center, said that while Argentina is still feeling the effects of the current recession, there are grounds for economic growth to resume. "The country has been coping with reduced exports and increased costs of capital, so the economy has remained slow. But established fundamentals are strong," Pupo said.
" We are expecting to see signs of recovery, although all eyes are now focused on the October presidential elections and the impact they will have." According to the LABC study, Argentina has been moving towards privatisation and deregulation in several industries, creating new opportunities for multinational investors.
In the study, the LABC comments on Argentina's most active industries, including: - Automotive - Although the devaluation of the Brazilian real has hurt automotive exports, the technology required for new models is creating a need for specialty parts manufacturers to set up locally, providing new investment opportunities.

- Consumer Products - The supermarket industry has seen significant consolidation but remains underdeveloped and fragmented in the interior of the country. The fashion industry has been active with investors purchasing licensees to exploit global brands locally.

- Energy - Continuing demand and the need for discovery and exploitation of reserves makes the integrated oil and gas industry attractive to investors. Argentine electricity consumption levels are low but growing, creating opportunities for generators and distributors. Argentina's mining industry has suffered during the recession, but there are companies with excellent potential as well as significant discoveries attracting international mining interest.

- Financial Services - The steps taken by the Argentine Central Bank to strengthen the financial system have resulted in increased confidence by foreign banks as demonstrated by increased investment positions. Banks with many branches, up-to-date technology and superior management are at a competitive advantage. The insurance industry is developing as standards for quality service are implemented and foreign investment is welcomed.

- Telecommunications -Since being privatised in 1990, telephone services have been expanding. The growth of data transmission services is expected to foster new investment opportunities in related industries, such as cable and telecommunications equipment, the Internet, digital television and e-commerce.

PriceWaterhouseCoopers has been practising in Latin America for nearly a century, with the first office opening in Mexico City in 1906 followed by Buenos Aires in 1913. With a network of 93 offices in 35 countries in Latin America, PriceWaterhouseCoopers is Latin America's leading professional services provider. The firm's LABC acts as a port of entry for U.S. companies investing in or interested in Latin America, and links clients to a full range of PriceWaterhouseCoopers services throughout the U.S. and Latin America.
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