That Argentina’s economy is going from bad to worse is nothing new, but now the crisis may get even worse due to the prolonged drought that will significantly impact its economy.
The country’s Gross Domestic Product (GDP) may suffer a worrying 2% reduction.
Agricultural exports are responsible for much-needed foreign currency for the country, and this period of commodity sales, which runs from March to May, is usually the relief that every year saves the Argentine economy, but this year the wheat harvest – the main agro crop of the ‘hermanos’ – was a total failure.
As a result, the wheat harvest yielded 12.4 million tonnes, about half the previous season’s total, and projections for the remaining crops were all revised downward.
For example, expectations for the soybean crop were reduced by 12% (33.5 million tonnes), while corn estimates were cut by 15% (41 million tonnes).
The precarious agricultural situation has also damaged Argentina’s relationship with the IMF (International Monetary Fund), with the country struggling to meet its required net international reserves.
Farmers are facing financial difficulties: small producers are barely making ends meet, and the big agro players are being pressured to change crops and reduce planting area, according to a report by the Geopolitical Futures agency signed by Latin America expert Allison Fedirka.
To add to the tragedy, the dollar crisis also limits the ability of Argentina’s central bank to stabilize the local currency, the Peso, which will further increase the cost of imports.
Since Argentina still imports many inputs and even depends on imported electricity from Brazil, there is no prospect on the horizon for the government of leftist Alberto Fernández to get his country back on track.
With information from Brasil Sem Medo