Many companies have long histories of booms and busts. The same is true of some countries. Many of them are located in South America where bad political decisions often turn economic expansions into recessions, cautions Jim Powell, international expert and editor of Global Changes & Opportunities Report.
At some point, disgruntled citizens elect leaders with more conservative agendas, and conditions begin to improve. Nowhere is the yo-yo effect more pronounced than in Argentina that has been experiencing tough economic times and political turmoil.
The country has a great deal going for it. Argentina has a growing manufacturing industry and a bountiful agricultural sector. The country also has the world’s second largest shale gas reserves, and the fourth largest reserves of shale oil. Argentina’s energy bounty is becoming increasingly valuable.
Equally timely is the government’s program to eliminate its primary fiscal deficit by next year. It will help even if the deficit can only be cut 15% to 20%.
For its part, the IMF recently revised its $40 billion aid program to help the country pay its foreign debts. Foreign repayments will also be aided by the current correction in the US dollar, an event that I have been predicting for several months
Lastly, devaluing the Argentine peso reduced the value of the country’s internal debts, a path that most countries — including the US — will soon need to take with their currencies.
The bottom line is that Argentina’s economic plunge appears to be slowly turning into a new upturn. If I am correct, investors in the Global X FTSE Argentina ETF (ARGT) should see excellent long-term profits.