The Argentine government has introduced various business regulations that foreign companies which seek to do business in Argentina need to comply with. This has had a negative impact on business activities in the country.
Argentine president, Christina Fernandez de Kirchner has introduced policies which have affected the country’s economy negatively. Car importers in the country from Germany and Japan have been made to agree to new conditions for them to continue operating in the country. These conditions are making it difficult for them to do business in Argentina.
The importer of Porsche in the country has been asked to export olives and Malbec wine to be allowed to operate in the country. Other car importers have also had to comply with similar conditions. These conditions are not good for the car sellers because the costs of doing business have increased.
They have been made to focus on activities which they have little expertise in; to fulfil stringent business polices put in place by President De Kirchner’s government. These actions have dented the image of De Kirchner’s government in the eyes of foreign investors.
The volume of car imports into Argentina has decreased from an estimated 580,000 vehicles in 2011 to 420, 000 vehicles in 2012. The insistence by the government that car importers need to export the country’s agricultural products equivalent to the value of cars imported has caused a lot of distress.
The country’s economic policies fail to take note of the economic situation in the global economy. Argentina has experienced high rates of inflation which have made its products very expensive. The conditions given to the car importers are not going to change this economic situation.
The country’s main currency, the peso, is facing serious challenges. The country receives more imports than exports because locally produced goods are very expensive. The value of the peso against the US dollar has strengthened; because importers are restricted on the amounts of dollars they can hold.
This has made it difficult for crucial sectors in the economy to import raw materials from abroad. The government’s currency laws have severely affected the importation of crucial capital goods necessary for key economic sectors to perform. The macro economic situation in the country is bleak because the policies introduced by the government are unfavourable for local and foreign investors.
Argentina is losing the confidence of foreign investors, some of whom have closed their business operations in the country. The country’s industrial output is declining which has affected economic growth in the first three quarters of 2012. This economic outlook has resulted from the De Kirchner’s policies which restrict the amounts of dollars Argentines can possess.
Local industries which rely on imported raw materials cannot access sufficient quantities of dollars for their operations and this is affecting their output. Argentina is likely to slide into more problems similar to the economic decline that engulfed it in 2001 when it was unable to service its debt.
The country’s stringent import controls have affected the performance of its key industrial sectors. The import restrictions will make other countries that trade with the country to impose their own restrictions against Argentine produced goods. This will limit the effectiveness of the currency and import regulation policies which have been put in place by the government.