Argentina, Post-Cristina—The Fiesta Of Low Prices Is Now
Argentine elections over the weekend ushered in a new era. Pragmatist Mauricio Macri will take over as president, instead of the hand-picked successor to populist President Cristina Kirchner.
I’m thrilled. Argentina can look forward to a return to normalcy.
Cristina’s people distorted the economy, restricting imports, controlling prices of meat, fuel, flour, and nearly everything else in a family’s food basket, and nationalizing both the national airline and the state oil company.
Cristina’s moves brought on high inflation, high cost, and high crime, problems that drove my wife Vicki and me out of the country in 2012. Upkeep on our house outside the city, mostly for guards and property taxes, went from US$2,000 a year in 2006 to a projected US$40,000 a year in 2013. And crime soared.
Cristina maxed out her term limit and was unable to run again. In last week’s elections voters faced a stark choice between Cristina’s guy, Daniel Scioli, and Mauricio Macri. Scioli is another Peronist, was vice-president under President Néstor Kirchner, and is the current Governor of Buenos Aires province. Macri was former president of Boca Juniors football club and is the current mayor of Buenos Aires city. Scioli represented more of the same, more controls, inflation, distortions, shortages, handouts, and so on. Macri represented common sense. With President Macri we can expect a pragmatic, business-like approach to running this country.
What does this mean for you and me, the would-be investors in Argentina?
With high inflation and multiple exchange rates, Argentines for decades have priced real estate in dollars. Cristina hated that dollarization, so she restricted dollar purchases. Macri will reopen dollar sales and allow real estate markets to function normally. Prices should head up as a result.
What’s our window to act?
Vicki and I lived in Argentina for the greater part of three decades. Windows of opportunity there tend to go in broad cycles. If Macri succeeds there’s plenty of time to get to the party. If Macri fails the party will never come.
If you’re willing to take that bet, then this is the time to be shopping. As a friend in Buenos Aires puts it, “the fiesta of low prices is now.”
If Argentina is on your live-and-invest overseas agenda, you might want to think about jumping on a plane.
Paul Terhorst
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