The introduction of capital controls in Argentina last weekend seems to have stabilised the official foreign exchange market, but it is likely to have pernicious economic effects. Moreover, while President Macri has stated that these controls will be temporary, there’s a good chance that they will become permanent after a likely victory for the Peronist opposition in October’s presidential election. Elsewhere, the weakness in Brazilian capital goods production in July suggests that the rebound in investment in Q2 didn’t last into the third quarter.
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