ARGENTINA ECONOMY: On a knife edge

Mar 1, 2014

Argentina has so far dodged another long-predicted financial crisis. Many believe it might just avoid the worst this time—even if that means via the ballot box. By Charles Newbery

When Argentina’s government said this February that inflation was higher than it previously thought, bonds rallied by up to 21%.

That may be odd, but this is Argentina. The news came as a relief.

The government said consumer prices rose 3.7% over the month of January compared with December, not far off some private sector estimates of close to 5%. Many analysts had feared less than 3%, which would have been a sign that Argentina’s president, Cristina Fernández de Kirchner, would continue to downplay inflation as a concern despite, some warnings it could surpass as much as 40% on an annual basis this year.

While higher inflation is a worry, the cheer was rooted in Argentina’s admittance of the problem and then coming clean — at first glance — after seven years of underreporting consumer price data.

It may be too soon for applause, however. Some say a...

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