Neighboring economic crisis demands attention: 'Argentina is only relevant to Brazil'

Argentina is Brazil 's third largest trading partner , which means that movements in Argentine territory have repercussions on Brazilian soil . Attention to the neighboring country becomes even more necessary in a year of presidential elections, as is the case of the “hermanos”. Buenos Aires has shown signs of fatigue from traditional parties and Peronism, showing signs of moving towards the conservative right. In addition to the political issue, a crisis in Argentina could affect Brazilian industry and jeopardize the country's reindustrialization plans.

As a result, all of Latin America would be impacted. From an economic point of view, experts point out that the situation in Brazil is not similar to the crisis experienced by Argentina. However, Brasilia should learn from the difficulties that its neighbors have faced so as not to go through similar or even more complicated situations. In the political sector, countries are experiencing similar scenarios, and the 2023 elections in Argentina may be a preview of what Brazil must face in three years, when it needs to go back to the polls to choose the next head of state.

Economic consultant and international analyst, Gustavo Segré considers that it is important to mention that the Argentine crisis is chronic. He recalls that the country has changed the national currency five times since 1881 and has a “default” debt, as debts are not paid. “Furthermore, Argentina has a very serious problem with its fiscal deficit. Historically, it doesn't care about that and spends more than it earns. From 1900 until today, that is, 123 years, in only ten years has the country registered a surplus. 

This shows that there is chronic neglect of public accounts, which ends up reflecting a crisis from which it is very difficult to get out, ”he observes. Segré points out that economic indicators are very different between the two countries, but that the Argentine scenario should teach Brazil the importance of controlling public spending. 

The assessment of Livio Ribeiro, an associate researcher at FGV-IBRE, is that the similarities between the countries are very low from an economic point of view . “Argentina is not relevant to basically anywhere in the world, with the exception of Brazil. What we need to be very careful about is that Argentina is still a relevant trading partner for us, although less than it was in the past. And it is also a country that is permanently in crisis. Argentina in crisis hinders us, but trying to save it from its own hardships is not our job either”, he opines.

Vinicius Vieira, professor of international relations at Fundação Armando Alvares Penteado (Faap), assesses that the situation ofBrazil is a long way from the one faced by Buenos Aires. However, it is necessary for Brazilian agents to keep an eye on the neighboring country because it is the main market via Mercosur for manufactured products. “A crisis in Argentina could be fatal for our industry and, therefore, for our reindustrialization plans”, he assesses. 

Professor of international relations at FESPSP and researcher at the Observatório de Regionalismo (ODR), Flavia Ross adds that Brazil managed to avoid the mistakes made by successive Argentine governments since the 1990s, such as the dollarization of the economy. However, with regard to politics, the situation of the two countries is similar. “The polarization of Brazilian society continues, and the Lula government has encountered difficulties in Congress for the approval of measures it deems necessary. In Argentina, the polarization between two political camps in society is known as 'La Grieta' and is reflected in Fernández's declining popularity, as well as presenting itself as an important component of this year's presidential campaigns. Brazil must carefully observe the next movements in Argentine politics,

Argentines are tired of Peronism and traditional parties. Therefore, it is not surprising that Javier Milei, an admirer of Jair Bolsonaro and Donald Trump, is receiving a strong popular impulse. Historian José Luiz Beired, professor at the São Paulo State University Júlio de Mesquita Filho (Unesp), adds that “Argentina is becoming a bipartisan country, because there is dissatisfaction with its great forces, and a third has emerged”. The expert says that this is exactly what makes Milei gain space: he has an attractive speech, promises to be modern, manages to attract young people and brings radical solutions to the country's economic problems. “There is great doubt about the viability of Milei's ideas and the risks he may pose for the country.

If he wins, the victory of a right-wing ruler in Argentina could affect ties with Brazil, which currently has a leftist president. “The relationship between Brazil and Argentina goes through the political relations of the parties that are in power. When we had Mauricio Macri in power, he was in dialogue with Jair Bolsonaro. When Alberto Fernández won, relations weakened, but they got stronger again with Luiz Inácio Lula da Silva in power”, explains Mackenzie's postgraduate coordinator in institutional and governmental relations, Márcio Coimbra.