The Argentine economy appears to have had a decent
third quarter (3.5% GDP y/y??). Source CE.
However, the relatively good performance of the economy
has come on the back of an increase in government spending
ahead of elections that were held earlier this year.
(Super-loose fiscal policy has caused public spending to reach
33% of GDP)
And higher government spending has been financed by
a faster pace of peso printing at the central bank.
As such, the recent growth burst is unsustainable as
the balance of payment crisis rumbles on (Fx
reserves near the 30bn$, or 5 months of imports equivalent).
The authorities allowed the pace of depreciation of
the official peso exchange rate against the dollar to
accelerate. The peso is now worth 6.3/$ in the official
market and could head towards 8/$ next year.