Monday, May 14, 2018

We have been writing on the growing vulnerabilities across EM where we have been focused on two countries: Turkey and ArgentinaGiven recent developments in the latter, this note revisits three key issues. First, Peso weakness has closed half the overvaluation we previously estimated, but some overvaluation remains and is in many respects the key underlying issue. Second, a $30 bn bailout may suffice for stabilization, but is arguably at the low end. Third, given rising global rates, Argentina is potentially the tip of the iceberg in EM.

IIF Authors

Robin Brooks

Managing Director and Chief Economist

Martín Castellano

Head of LATAM Research