The same refrain could be heard from many of the global CEOs attending Argentina’s blockbuster foreign investment conference this week: ‘Argentina is set up to win if it can change its game and fix itself.’
So said Andrew Liveris, chairman and chief executive of Dow Chemical, who pledged $500m of further investment in Argentina. He was followed in short order by James Scriven, CEO of Inter-American Investment Corporation, who unveiled plans to invest $5bn in Argentina over the next few years, and Toyota, which revealed an immediate $800m expansion plan.
The UK’s Sir Martin Sorrell, chief executive of advertising group WPP, praised Mauricio Macri, Argentina’s president, who told delegates in his opening address to the conference they were ‘in the right place at the perfect moment for investment.’
Sorrell said Macri had led ‘a remarkable revival of Argentina’, and made the case powerfully for further investment in the country. ‘There’s immense talent here, and fantastic natural resources. The combination makes for incredible opportunity, and Argentina being open for business under this leadership is critical,’ Sorrell said.
The Macri government went into the conference hoping to raise tens of billions of dollars of investment from abroad in the medium term, and seeking a domestic political boost in the short term. Somewhat unusually, it published a target total of $175bn, with ‘target’ investment numbers for individual sectors: $76bn for energy and mining, $75bn for infrastructure, and $15bn for the agricultural industry, to take but three. Such hopes hinge on the confluence of economic policy and political popularity that confronts the Macri government.
As Macri himself outlined in his opening address, his government has sought to break with the country’s Peronist past of debt, deficits and rampant inflation.
The Macri team has settled with creditors holding out on debts from the country’s 2001 default, paving the way for a return to capital markets. The peso now floats freely, after years in which it was held artificially high by draining central reserves. Inflation is falling, as is the budget deficit.
‘The question is whether Macri retains the confidence of his own people and country, and less importantly that of the world of investors outside,’ says one of Argentina’s leading pollsters. ‘All these CEOs are betting on Macri as much as Argentina.’
Macri’s approval ratings remain solid, though the percentage of those questioning the country’s economic direction is rising in the face of higher unemployment and lower government subsidies for household energy bills. The key test will come next year when his government faces mid-term elections.
‘I’m optimistic, Macri has put us on our new road, and he is determined to see it through,’ said Gustavo Grobocopatel, president of one of Argentina’s biggest agricompanies. ‘Macri knows that we have to confront the issue of being competitive.’
Similarly, the president and his government appear to understand the need to make friends out of foes. Significantly, the UK sent a government team to the conference, headed by Sir Alan Duncan, minister at the UK Foreign and Commonwealth Office. ‘The world right now is looking at Argentina, and seeing wonderful, sensible policies that prevent the country from going over the edge,’ he stated, carefully avoiding mention of the Falklands conflict or the fact that Britain needs trading partners post-Brexit. ‘We have every intention of working with Argentina closely on developing trade and commerce so that we both benefit.’
Sorrell added that, ‘Argentina represents a very important bilateral relationship now, rich with opportunity, on a par with Brazil, and not just for Britain.’