As discussed before, Argentina is facing deteriorating economic conditions and an international backlash from its decision to nationalize YPF. Here is the latest.
1. The EU launched its complaint with WTO.
WSJ: - EU officials say Argentina's decision last month to nationalize oil and gas producer YPF SA, a unit of Spanish oil company Repsol YPF SA, was only the most recent in a series of moves by Mrs. Kirchner's government that have harmed foreign investors and manufacturers. Friday's complaint at the WTO, the Geneva-based arbiter of trade disputes, won't mention the nationalization of YPF, which doesn't violate WTO rules, two of the EU officials said. But the nationalization has convinced European officials that more forceful action is needed to fix the deteriorating economic relationship between Europe and Argentina.2. The manufacturing sector is starting to contract. Argentina's real estate and cement purchases are typically transacted in US dollars, while salaries are in pesos - a difficult situation to sustain as the currency declines.
"Repsol is the straw that broke the camel's back," said one EU official familiar with the complaint. "It reflects more broadly a deepening protectionist agenda by Argentina."
Marketwatch: - Argentina's manufacturing sector contracted last month, in the latest sign that high inflation and a slowing economy are taking their toll on factories in the South American nation.3. The nation is now facing a possibility of a primary budget deficit. This is dangerous because foreign reserves (which would decline in a deficit situation) have in the past been used to fund Fernandez's populist agenda.
Industrial output fell 0.5% from April 2011, and posted a scant 0.1% increase from March, the national statistics agency, Indec, reported Thursday.
Reuters: - If government spending keeps the pace it has set so far this year, the primary balance will be pushed into the red by January. That would threaten funds needed for the welfare programs and subsidies that lie at the heart of President Cristina Fernandez's popularity.On a related note, Sober Look has been banned from posting on Reddit/Argentina for submitting a post called "Argentina is not making many friends internationally". Reddit has been a good way to get feedback and initiate discussions on various topics. Here is the feedback on this post:
This would come at a time of economic growth constrained by global sluggishness. The alarm sounded on Wednesday when the Economy Ministry said April's primary budget surplus was 1.06 billion pesos ($237 million), down 46 percent from the surplus posted in the same month last year.
It seems some people in Argentina are refusing to face reality.