Before we do a deep dive into the state of Argentina's economy, I would first like to say that it would be wise to look at the graph of $ARS/USD(ARSUSD.FOREX)$

When we talk about investing, we talk about allocating capital for a long term into a company/organisation/country which we believe will provide returns over a sustainable period of time. ie. Not day or swing trading. 

Qn: If we take a period of 5 years, and assume the asset price stayed the same, what would be the current return on the asset solely by influence of exchange rate factors itself? 

Ans: About 10x. Not in the positive direction, but in the negative direction. With that being said, in order for your asset to maintain its value in terms of USD, it would have to provide gains of about 58.5% per year in order to keep the asset value CONSTANT. 

Let's now take a dive into Argentina's economy.

Argentina is essentially broke. Having been bailed out more than 20 times by the IMF, the country has tied itself to more economic reform programmes that I can count, which are all aimed to kickstart the economy back into action and allow Argentina to repay it's debts. At the heart of it however, is Argentina's socialist policies, leading to the government raking up huge amounts of debt. With debt comes borrowing, and with borrowing comes repayment, and with repayment comes devaluation. Inflation has skyrocketed, pushing many Argentinians into poverty. 

In comes Javier Milei, minimal experience in politics, proposing policies that has been considered by economist to be dangerous and pushing Argentina deeper into the fire. But Argentinians has shown in the polls that they do not care - to them, the economy is already up in flames. Even if the policies proposed fail, well, there isn't much more to fall anyway.

It remains to be seen if these policies will work out. For Argentina, a huge fiscal cut will be needed to reduce it's debts, which might prove unpopular to citizens who will see a drop in government handouts. However, if done properly, this would also stimulate the economy as it pushes more unemployed person's to look for jobs as the benefit of working (ie. Wages) outweigh the cost of working (ie. Losing out on unemployment benefits). Increase in foreign direct investments would also be needed to restimulate the economy, with this tied to policies that would allow Argentina to benefit from the exchange of knowledge, thereby securing Argentina's long term growth prospects. Education, something that has taken a backseat to the stumbling economy, also has to improve, if Argentina ever wants to see the light at the end of the tunnel. 

In conclusion, would Argentina ever recover? Possibly, with drastic reforms, something that Javier Milei has promised. It remains to be seen if such measures are a step in the right direction, or a step into theatrics. 

The risk is simply too high. If anything, a small investment into the entire Argentinian economy might be possible, but you'd likely be doing charity. 

@Tiger_Academy  @TigerStars  @TigerWire  @MillionaireTiger  @Tiger_comments  @CaptainTiger