Argentina's New President Lays the Groundwork for a Better Economy

After only a month in power, Argentina's new government has already taken significant steps to address the country's economic problems. Since December, Argentine President Mauricio Macri has managed to remove export taxes for agricultural products, slow the printing of pesos, abolish most currency controls and take steps to remove subsidies on electricity, food and natural gas. Each of these practices, while they were in place, increased Argentina's reliance on deficit spending over the past few years, contributing to high inflation and a populist policy agenda that scared away foreign investors.

Despite his initial momentum, Macri will encounter several constraints in his effort to jump-start Argentina's economy. The economic downturn in neighboring Brazil will be a drag on Argentine growth in the short term, as will China's slowdown. At the same time, Macri may also see little improvement in Argentina's energy sector during his term as low oil prices reduce the country's chances of attracting energy investment and weaken the government's will to scale back its energy imports. In the end, however, the future of Argentina's economy looks far brighter than it has in years.