Economy

Argentina’s imports are rising rapidly as libertarian President Javier Milei bets on a strong peso and cheap foreign goods to help fight inflation, even as they put pressure on the country’s scarce hard currency reserves.As Argentina recovered from a recession that depressed imports and Milei began opening up the protectionist economy, the country’s inbound trade surged 30 per cent in the past six months compared with the previous period on a seasonally-adjusted basis, according to the national statistics agency.Italian pasta, Brazilian bread and Uruguayan butter have become increasingly visible on supermarket shelves, as retailers almost doubled food imports in the first two months of 2025 from a year earlier. Solar cell imports have grown tenfold, while farmers quadrupled overseas tractor purchases. The strategy of strengthening the peso while loosening import restrictions has helped tame spiralling inflation, but is not without risk. As the country spends more dollars abroad and fails to build up reserves, it becomes more vulnerable to an external market shock or a big devaluation that would undo Milei’s progress on inflation.The situation has piled pressure on the president to secure an IMF loan to replenish reserves, which he says will be delivered in April.Some content could not load. Check your internet connection or browser settings.The peso’s strength has become a politically fraught subject in Argentina, with Milei repeatedly attacking economists who describe risks in its appreciation as “econo-swindlers”. Several retailers declined to speak on the record about the peso’s role in rising imports, citing fear of angering the president and local manufacturers.Chinese imports are growing fastest, more than doubling in February compared to the same month last year, as business leaders visit the country to shop for suppliers. Previously restricted overseas purchases via ecommerce services such as Alibaba have skyrocketed.“People are filling the cargo stores of Buenos Aires airports with boxes,” said Ruben Minond, owner of cycling retailer Tienda Bike, who has stepped up purchases of Chinese bike lights and bags, and plans to start shipping bicycles by container.“I’m buying more overseas than locally now, because it costs less and it’s much, much easier than it used to be,” he added.Current import levels, of $5.9bn in February, are not unprecedented in Argentina, where trade flows have swung dramatically over the past decade.But the rapid growth reflects the tricky balancing act Milei must perform to deliver lasting stability.To tackle the normally conflicting goals of slashing Argentina’s severe inflation while at the same time restarting economic growth, the president has turned to the country’s strict currency controls.Following a big initial devaluation when he took office in December 2023, Milei let the peso slide only 2 per cent a month last year, despite inflation well above that rate. That has strengthened the currency 47 per cent in real terms, according to consultancy GMA capital. The peso’s appreciation has dragged down price pressures but made domestic goods much more expensive in dollar terms compared to other countries, while increasing Argentines’ purchasing power abroad.Alongside rising imports, Argentines are holidaying abroad in near-record numbers, as the strong peso makes Brazilian beaches and Chilean shopping malls affordable. The country recorded its second-highest monthly tourism dollar spend in January, at $1.5bn.As a result, Argentina has been running a current account deficit since June, while its trade surplus for goods narrowed to $224mn in February, down from well over $1bn a month for most of 2024.“This is the collateral damage of the strict exchange rate policy,” said Ramiro Blazquez Giomi, Latin America and Caribbean strategist at financial services group StoneX. “In the short term, the growing current account deficit puts pressure on the availability of dollars that the government needs to keep the currency stable [and avoid spikes in inflation].”Many healthy developing economies run current account deficits, mostly financing them with inflows of foreign investment, Blazquez noted. But crisis-stricken Argentina is receiving very little foreign investment and cannot borrow on capital markets. Therefore, without a current account surplus, Milei cannot build up the negligible central bank reserves he inherited, which remain about $6bn in the red excluding liabilities.But the government is undeterred and is slashing tariffs and cumbersome customs regulations on hundreds of goods.“We are continuing to cut taxes and tariffs to stimulate competition and keep lowering inflation,” economy minister Luis Caputo said this month as he chopped duties on textiles, one of Argentina’s most protected industries.Manufacturing leaders say the imports surge will force lay-offs in a sector that employs almost a fifth of the nation’s workers. Government officials say manufacturers are benefiting from cheaper imports of parts, and that businesses must become more competitive.Argentina’s President Javier Milei is aiming to avoid a big devaluation of the peso More

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Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.International carmakers are rushing to ship vehicles and core components to the US to get ahead of the next round of President Donald Trump’s tariffs, which threaten to wreak havoc on automotive supply chains. In response to requests from auto manufacturers, car-carrying vessels have been dispatched to Asia and Europe amid plans to carry “thousands” more vehicles than usual to the US, according to industry officials.Lasse Kristoffersen, chief executive of the leading vehicle shipping line Wallenius Wilhelmsen, told the Financial Times that there was “more volume out of Asia than we’re able to take from our customers”. The company has added capacity to address the demand, he said, adding that the increase would be larger were it not for the industry’s shortage of car-carrier vessels.Trump has said that “reciprocal” tariffs on the US’s trading partners will come into effect on April 2 — the same day that a 30-day reprieve ends on the president’s pledge to impose 25 per cent tariffs on imports from Mexico and Canada. South Korean carmakers Hyundai and Kia were among those trying to ship more vehicles to the US before the new tariff deadline, according to another shipping executive. Hyundai declined to comment on its strategy but said: “We continuously optimise our shipment plans to adapt to market conditions.” An official at a German carmaker said it was shipping more vehicles from Europe to the US to address the tariff threat. The rush has led to a 22 per cent per cent year-on-year rise in vehicle shipments from the EU to the US in February, while those from Japan increased 14 per cent. Shipments from South Korea to North America were up 15 per cent.Stian Omli, senior vice-president at Esgian, a platform monitoring car carriers, said there was a “noticeable increase” in vessels heading from Europe to the US. “We do see an increase out of Europe and we will probably soon see an increase out of east Asia,” he said, adding that vessels needed to complete their journey to be counted. “There are a lot of car carriers reporting they will go to the US, which is a clear indication of increased activity.” Companies producing cars and components in Mexico and Canada are also preparing for tariffs on imports to the US. Honda is trying to bring forward shipments from these two countries, while Chrysler and Jeep owner Stellantis said it was moving stocks across the border into its US plants and producing more vehicles during the one-month hiatus.“When you look at the vehicles we produce in Canada and Mexico, we have a pretty good supply on the ground right now with our dealers, probably 70 to 80 days of most of those units,” Doug Ostermann, Stellantis’s chief financial officer, said at a conference on Tuesday. Another logistics executive who works in the car supply chain said manufacturers of electronic goods used in cars such as stereo systems were “looking to stockpile more into the US”. The approach is not uniform across the industry, however. Toyota said it “has not been increasing vehicle imports to the United States from Japan (or from other countries) in anticipation of possible future tariffs” while two Japanese car carriers reported little change in demand.While the 30-day delay to tariffs have given carmakers additional time to ship inventory to the US, Cody Lusk, chief executive of the American International Automobile Dealers Association said the bigger uncertainty was over how long the tariffs would last and who they would ultimately apply to. “We’re all waiting to see,” Lusk said. “Is each country treated differently? Is everybody the same?”Wallenius Wilhelmsen’s Kristoffersen said: “The bigger question is how will it affect the car trade over time . . . Customers are very uncertain which direction this will take.” Additional reporting by Claire Bushey in Chicago and Patricia Nilsson in Frankfurt More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Temasek and Warburg Pincus are preparing to put healthcare supply chain management company Global Healthcare Exchange up for sale, aiming at a valuation of almost $5bn, according to people familiar with the matter. GHX, in which the Singaporean government-backed investment fund owns a majority stake and the US private equity group the remainder, was working with advisers on a sale process, which could result in a partial or full- stake sale, the people said. GHX is expecting to receive formal bids in the second half of the year. The auction is the latest example of investment funds looking to offload assets in a push to realise returns on investments. Temasek has been invested in the company since 2017, while Warburg Pincus bought a minority stake in 2021. By mid-March, private equity groups had offloaded a total of nearly $119bn in assets globally this year, through sales or public listings. This is the second-highest level in two decades but still below the same point in 2021 when a boom in sponsor-backed deal activity resulted in $211bn of exits, according to a Bain analysis of Dealogic data. The GHX sale process was likely to draw interest from private equity groups as well as strategic buyers, but it might not result in a sale if the funds decided to hold on to the company, the people said. GHX provides cloud-based inventory, supply chain and payment management services for healthcare suppliers and providers. Temasek and Warburg Pincus declined to comment. GHX declined to comment on “speculation” about the sale process, adding that the company was “focused on delivering innovative supply chain solutions that improve efficiency and reduce costs for healthcare providers and suppliers”.This year, private equity groups have managed to engineer some large exits from software companies. Warburg Pincus, alongside members of the founding management team, fully exited a 90 per cent stake in electronic health records company Modernizing Medicine, selling to Clearlake Capital in a deal that valued it at $5.3bn, with the private equity group realising a nearly 10-fold return on its investment, according to people familiar with the matter. Thoma Bravo also struck a deal to sell energy software group Quorum to Francisco Partners for $2.4bn. Blackstone is also looking to exit electronic health records company HealthEdge. Temasek bought a stake in GHX from Thoma Bravo in 2017, valuing the business at $1.8bn. Warburg Pincus injected $500mn into the business in 2021, at which point Thoma Bravo fully exited its stake. Temasek has $291bn of assets in its global investment portfolio, while Warburg Pincus has $87bn in assets under management. More

When economists seek to account for the dollar’s outsize role as the only true global currency, they point to structural factors such as the US share of world GDP, or the depth and liquidity of US financial markets. This approach underlies the sanguine view of many financial market participants that, come what may, so long as the US remains the world’s leading economy, the dollar will remain its safe haven.The second Trump administration is a reminder that raw numbers can only take us so far. For as historians will tell you, it is the actions of people, not economies or markets in the abstract, that explain how international currencies rise and fall. It was people who took the crucial steps to build the institutions that made the international dollar. And it is people who will ultimately determine whether these same institutions survive or fail.Paul Warburg, chief architect of the US Federal Reserve More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldUS President Donald Trump has revoked security clearances for Kamala Harris and Hillary Clinton, his former rivals for the White House, as he expands his campaign of retribution against political opponents. Trump announced on Friday night that the former vice-president, and former First Lady and secretary of state, would be included in a list of individuals he wants stripped of access to sensitive government information. He defeated Clinton in the 2016 presidential election and Harris in 2024.Trump’s list also included Fiona Hill, the Russia expert who has been critical of his stance towards the war in Ukraine both during his first term in office and recently, as he has sought to broker a settlement of the conflict. “I have determined that it is no longer in the national interest for the following individuals to have access to classified information,” Trump wrote in a memo to the heads of government agencies. Trump had already included Joe Biden in the roster of people who should be deprived of security clearances, along with some of the former president’s top aides including Jake Sullivan, the former national security adviser, and Antony Blinken, the former secretary of state. Trump’s move highlights the extent to which he is using the first months of his second presidency to target political foes. This includes Democrats and also Republicans who have opposed his return to office, such as Liz Cheney, the former Wyoming congresswoman who was also stripped of her security clearances. Trump has also targeted Alvin Bragg, the Manhattan district attorney, and Letitia James, the New York State attorney-general, after they brought legal cases against him, including one that led to his conviction for falsifying business records last year. The rescission of security clearances for former officials and political foes is the latest instance of Trump gnawing away at the norms of US democracy, including the notion that even political critics of the president might need to access sensitive information. The move comes amid broader concerns that Trump is testing the limits of his constitutional powers in his efforts to deport and detain certain immigrants, as well as his sweeping drive to gut the federal government with mass firings and spending freezes. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Global investors are pulling their money out of south-east Asia as concerns mount over the region’s largest economies and many traders rotate back into Chinese equities.Indonesia and Thailand, the region’s two biggest economies, have seen foreign equity outflows in the year to date, while their stock markets have been some of the worst performing this year.Indonesian stocks fell to their lowest in four years this week — though they have since recovered some of the losses — while the rupiah is trading near five-year lows. The Jakarta Composite stock benchmark extended losses on Friday, dropping 1.2 per cent.The MSCI Indonesia index is down about 16 per cent from the start of the year in US dollar terms. The MSCI Thailand is down just over 12 per cent in the same timeframe.The sell-off, driven by economic concerns in both countries, has been exacerbated by a global trade war sparked by US President Donald Trump as well as regional fund managers rotating their money away from the region and towards China.Foreign investors have pulled a net $1.3bn from Indonesian markets and $500mn from Thai equities this year, while putting $13bn into Chinese equities, according to figures from the Institute of International Finance. Chinese equities have been some of the best-performing assets globally this year, as investors pile into tech stocks in the wake of Chinese start-up DeepSeek’s advances in artificial intelligence. Hong Kong’s Hang Seng index is up more than 20 per cent since the beginning of the year.“It’s hard to take a strong call on south-east Asian markets when China is back in the equation,” said Daniel Ng, Asian equities investment manager at Aberdeen.South-east Asia could also be hit by Trump’s tariffs, warned analysts, not least because of a flood of rerouted exports from China.“With trade war risks pushing down commodity prices and China exporting more to the rest of the world, countries that are more vulnerable to these factors will be more exposed,” said Trinh Nguyen, senior economist for emerging Asian markets at Natixis.Some content could not load. Check your internet connection or browser settings.Indonesian assets have been hit by concerns over slowing economic growth and President Prabowo Subianto’s expansionary fiscal policies.Since he took office in October, the rupiah has fallen about 6 per cent against the dollar. It is one of the world’s worst-performing currencies this year alongside the Turkish lira and Argentine peso.Weakening purchasing power and falling consumer confidence have raised concerns about growth in south-east Asia’s largest economy at a time when investors are also worried about fiscal discipline. Prabowo has planned a nationwide free meals programme for schoolchildren and pregnant mothers at an expected cost of $28bn a year.Other policies, such as the launch of a new sovereign wealth fund, Danantara, have also rattled investors. The new fund, which will report directly to the president and manage some of the country’s largest companies, has raised fears of political interference and lax governance.“Investors are jittery [about Indonesia] arguably more so than they were during the early stages of the pandemic,” said Darren Tay, head of Asia-Pacific country risk at BMI, a unit of Fitch Solutions.Outflows from Indonesia are expected to continue. “In an environment of high macro policy and political uncertainty, the risk of outflows from the equity market remains visible, not only from foreign but also resident investors,” said Helmi Arman, Citi’s chief economist for Indonesia.Thailand, south-east Asia’s second-largest economy, has also been grappling with slower consumption and private investment. At about 90 per cent of GDP, its household debt is one of the highest in Asia and severely limiting consumer spending.The country is also heavily exposed to Trump’s tariffs given its large trade surplus with the US. Analysts at Bank of America estimated that a 10 per cent US tariff on Thai exports could shave 0.2-0.3 per cent off its GDP.“Thailand’s economic outlook remains challenging, with manufacturing stagnation, slowing tourism, and muted domestic demand,” analysts wrote. “While monetary easing may help, structural reforms are urgently needed to boost productivity and attract investment. Without proactive investment and ambitious reforms, Thailand risks falling into a low-growth trap.”Data by Haohsiang Ko More

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