Argentina: digging out.

Argentina's exports in June rose 16% from the year before, reaching US$3.4 billion for the month, according to the country's Ministry of Economy and Production. "Exports only started to reap the benefits of commodity prices and a devaluated currency until now," says Juan Arranz, a Santander Investments economist for Argentina. He projects exports to hit $38 billion in 2005, a 13.2% rise from 2004. The Central Bank has been working to prevent the peso from falling below 2,9 to the dollar, although some in the government would like the currency to strengthen "a shade," he says.

An increase in domestic spending helped imports rise by 34% in June on the year, to $2.7 billion. "We are in the process of recovery," Arranz says. After forging agreements with 70% of the private creditors involved in the default, Argentina's credit rating was upgraded, too. The new rating holds that Argentina is recovering, but only partially, thanks in part to its export focus of the moment. "Although the highly competitive dollar in Argentina helps exports, the other side of the coin is that capital goods for imports are so expensive that investments are not evolving as they would be desired," Arranz says.

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