ARGENTINIANS RESILIENCE: Lessons From Thriving Businesses in a Turbulent Economy
The Argentinian economy has seen its fair share of challenges. But amidst this, there are still businesses that have managed to thrive.
Contributing writers: Mariana Bernuez, Tobias Belgrano and Ignacio Schnitzler
Latin America’s third-biggest economy has seen growing inflation for quite some time.
The recent primary elections have been all over the news. But what does this mean?
It is too early to conclude, out of the 5 candidates that came out of the primary elections, and that will compete in the October general elections, there are 3 main candidates leading the polls, for now it seems there will be a three-way race between the candidates from the August primary elections in October.
Argentina holds elections for both the President and the legislature at the national level. The President and Vice-President are elected together for a four-year term through a direct popular vote. A runoff voting system is used if no party receives more than 45% of the votes or if a party receives more than 40% with at least a 10 percentage point lead over the runner-up.
To win outright, a candidate needs 45% of the Oct. 22 vote or 40% with a 10-point lead over second place. If no outright winner emerges, a head-to-head vote between the top two candidates will occur in November.
Javier Milei, a far-right populist candidate, secured a surprising victory in the primary elections. His promise to implement drastic economic measures has triggered uncertainty and worries among investors, resulting in a substantial decrease in the value of the Argentine peso.
Let’s hear from some of Argentina’s recurring speakers in our academic programs to understand better how the business community sees what’s coming up in the next few months.
Juan Cruz Diaz is the Managing Director at Cefeidas Group, a renowned international advisory firm specializing in political risk and corporate governance research and assessments; shares his insights on the current political landscape and its economic impact.
The unexpected results of the August primaries have created a highly uncertain scenario. Given Argentina’s history of economic volatility, companies and businesses operating in the country have extensive experience in dealing with adverse conditions. However, depending on who wins in October (or in the potential November run-off), the challenges to be faced may vary.
In this regard, if Milei were to become president, he would encounter difficulties in implementing his economic agenda since it is unlikely that La Libertad Avanza would secure enough seats in Congress. Such a scenario would force him to negotiate with actors whom he has criticized in his long-standing anti-establishment narrative.
In Massa’s case, it is expected that his presidency will continue the current approach. Without fundamental changes in the economic course, his administration would face the same obstacles as during his time as a minister: high inflation rates and peso devaluation. If he wished to change the economic course, Massa would have the challenge of aligning internal allies within the heterogeneous Peronist movement.
As for Bullrich, her economic proposals seek to deviate from the path taken by the current administration without resorting to more extreme measures like those proposed by Milei. However, similar to Milei, if her plan to reduce government spending fails to include measures to alleviate the impact on the lower-middle class, she may encounter significant resistance from various actors, such as labor unions and social movements.
Despite these challenges, the three leading candidates share some minimum consensus on meeting the country’s debt obligations, achieving fiscal balance, and promoting key sectors such as energy and mining. Regardless of who wins, it will be crucial for the next government to instill confidence in order to stabilize the economy and create conditions for the private sector to contribute to the country’s economic recovery.
How can Businesses ride the wave of Speculation between now and the general elections?
1 – A planned, strategic approach
Significant risks are involved in predicting how the election may impact a business. A more productive approach is gathering as much information as possible, considering that plans may shift on the fly. Monitoring the election campaigns and understanding how different policies or election outcomes may impact the industry, employees, and business supply chain is crucial.
2 – A cautious outlook
The currency in Argentina has been volatile for some time now, and this may spike, reflecting any uncertainty regarding the election. Therefore, businesses must not overextend themselves for fear of taking on risky investments that could turn around and cripple operations. It’s essential to remain guarded about making significant capital investments, keeping sufficiently flexible so that plans can be revised.
3 – Assessing the degree of risk
The election will impact different industries differently, and it’s worth carefully assessing each organization’s risk level. For example, a company that relies heavily on imports or exports should carefully assess the effects of exchange rate volatility. In contrast, more domestically focused companies should examine how the election could shape consumer sentiment. Likewise, tech industry professionals should examine how policies or new leadership may impact areas like regulation, intellectual property, or data privacy measures.
4 – Network and collaboration
It’s a smart move for businesses to get ahead of potential economic changes brought about by the election. Structures such as industry associations and government and academic networks can provide vital insights, early warning signs, and a sounding board. Networking can provide information that may not be available in other sources and may also lead to collaborations that could prove beneficial post-election.
5 – Seek help
Acknowledging that businesses are often too close to events to maintain a genuinely objective view is crucial. Businesses in Argentina could seek help from external consultants to assess industry-specific risks and develop contingency plans to prepare the company to weather any storm.
The upcoming elections represent an excellent opportunity for executives in the business sector to show their resilience and ability to surf the speculating wave of the Argentine economic climate.
How can businesses deal with speculation and inflation in the following months?
Let’s see what Agustina Morán & Natali Aún Santiago, Co-Founders of MAE shared with us:
MAE is Democratizing Entrepreneurship in Argentina through their platform that provides tools and services for entrepreneurs.
The reality of Argentina is in everyone’s light, and it is undeniable that the macroeconomic context makes entrepreneurs have to be constantly changing. Entrepreneurship today in Argentina is an arduous task. Sometimes, we hear or read phrases like “entrepreneurial independence,” “entrepreneurship is for anyone,” “work what you love and you will never work again,” and “start your own business and you will have no bosses,” among others.
Nowadays, there is a certain tendency to idealize the entrepreneurial universe, and the reality is that when you have your own business, you must have a lot of clarity about everything that this entails (in addition to a lot of perseverance and order). You need to know your purpose, know what capital you have, what is your growth plan, you need to know your team, and how flexible your structure is to sustain inflationary processes like the one we are experiencing, among other questions. Having some of these answers in mind makes the entrepreneurial universe have positive results despite the general context of Argentina.
We notice that the entrepreneurial “DNA” is growing. Growth, on the one hand, out of personal interest and, on the other, clearly out of economic necessity.
To put this in numbers, according to the Global Entrepreneurship Monitor (GEM) report, 23.3% of Argentine adults are involved in some type of entrepreneurial activity. This means that almost 1 in 4 Argentines is an entrepreneur.
Let’s have our own business, yes. Let’s generate our own companies because nothing is more gratifying than generating value for society, providing employment, and helping our country’s productive chain. But we have to know that there is a side B, behind every Argentine company, there is an infinity of sacrifices.
OPINION
Despite the current economic challenges, Three sectors can revitalize the economy – lithium production, the thriving oil industry in Vaca Muerta, and the knowledge economy industries. Despite the challenging times, these sectors hold immense growth potential. The current political climate and the visions of the leading candidates fuel hopes for a pro-market strategy that could further propel these industries to new heights.
Tobias Belgrano
Political Advisor 
International Journalist 
Member of our commercial team at Austral Group
The current situation in Argentina regarding consumption, inflation, and expectations for the upcoming elections creates a unique scenario where those who can quickly adapt their offerings to customer needs will have an advantage. Retail lives in the digital “survival of the fittest” era. While consumers initially choose a retail company based on three factors: 1- Assortment, 2- Coverage (time & distance), and 3. Price; They increasingly value the predictability and security of their purchases. E-commerce customers prioritize fulfillment, a key factor for repeat purchases. Therefore, sellers who can ensure a reliable supply chain to fulfill timely deliveries and maintain inventory availability will build customer loyalty even during uncertain economic times.
Lastly, online presence is more necessary than ever for businesses, as customers seek to compare prices from their mobile devices and make efficient purchasing decisions based on their online research to save time, even if they buy offline.
Pablo Scasso
Global Director
Merchant Strategy & Operations
WHAT LEARNING OUTCOMES ARE UNIQUE TO A VISIT TO ARGENTINA ON AN INTERNATIONAL IMMERSION?
Understanding of the Political System
It is important to understand the history of Argentina’s government to appreciate the current political environment and its implications for business, learning about the different political parties, their ideologies, and how they have impacted taxation, labor laws, and economic development policies.
Business students can better understand Argentina’s political system by visiting and talking to entrepreneurs and business owners during our organized business visits or consulting for startups and local businesses. They will learn about the public sector’s role in driving economic growth and gain insight into how businesses are affected by changes in government policies and regulations.
Appreciation for Risk Taking
Despite the political climate, many entrepreneurs have been willing to take risks to succeed. By learning from their stories, business students can better understand what it takes to succeed in this market, how to navigate uncertain environments, and make decisions that will benefit their businesses in the long run. By being proactive and adapting quickly to changing conditions, businesses can remain competitive and thriving despite the challenges posed by Argentina’s volatile political landscape.
Insight into Economic Challenges
We will learn how inflation, currency devaluation, public debt levels, and unemployment rates affect the economy. This knowledge can help students develop strategies for addressing similar issues when they return home or in their careers when working with companies in other countries with similar problems.
Understanding of Cultural Norms
In addition to learning about Argentina’s political system and economy, we will learn about its cultural norms and values. This includes understanding local customs related to communication styles, etiquette conventions, negotiation tactics, and other aspects of business perspectives, practices, and trends in this region for students to have in their toolbox through their international business careers when conducting international transactions or evaluating operations in other countries.
The political landscape in Argentina has been turbulent over the past couple of decades, with numerous changes in government and economic policies.
As a result, businesses quickly adjust their strategies and operations to respond to changing conditions. Staying informed is essential for businesses to remain competitive and successful, and these fascinating operating circumstances have a lot to teach business students about adaptability and resilience.
