The UK government announced this week £1bn of support through export credit for British companies that want to tackle South America’s second biggest economy. After a 20-year pause, this is definitely a good signal.
“The support will be offered in the form of attractive financing terms, loans for delivering projects and insurance against the risks of operating in other countries.”, reports GTR, adding: “A new UK-Argentina Commercial Dialogue group will be created to build a joint statement from the two countries in September that commits to boosting bilateral trade and investment by helping develop new commercial links and reducing existing barriers.” I totally welcome that.
From experience, most UK companies I know will appreciate the gesture but will also move with caution. Argentina is a very attractive market and I personally see so much potential, but it’s also a risky and unstable country. What will happen after Macri leaves? Will we get another 20 years of weak trade and diplomatic relations?
We can afford to be a bit optimistic, though. Bloomberg reported this week that “Argentine Economy Exits Recession, Easing Pressure on Macri” but even then “The incipient recovery in production is the first sign that Macri’s policies are gaining traction after a year in which inflation soared, unemployment rose and purchasing power declined. Still, the rebound is too weak for labor unions planning the first national strike under Macri for April 6, shutting down public transport and bringing the country to a halt on the first full day of the World Economic Forum in Buenos Aires.”
However, the potential is there now. If you are looking for distributors, this might the chance to consider Argentina again, and complete your South American distributor map. If you intend to invest, I would be a lot more cautious. Argentina is still in serious trouble and all the mismanagement of 15 years can’t be overturn in a few months, or even years.
If you’re considering Argentina, remember to think about Mercosur as a whole, and also take into account the possibilities of tackling Argentina at least initially from a base at a free trade zone in neighbouring Uruguay. And take your time to understand the market, Argentina is a really charming place to do business in, but it can also be slow, bureaucratic and risky. Having said that, you can strike gold there, too. Also, even if Buenos Aires is very alluring, remember that Argentina’s cities like Córdoba or Rosario can be pretty strategic, too.
In the meantime, I am enjoying the good news of hopefully more frequent and cheaper flights between Argentina and the UK. I’m based just a short ferry hop away from Buenos Aires so I really look forward to doing lots of business there.
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