Brazilian companies are considering investments in Argentina as President Javier Milei’s reforms stabilize the economy. With a focus on sectors like consumer goods and technology, businesses are exploring expansion despite ongoing recession and capital control challenges. Investor sentiment is shifting positively, indicating potential growth opportunities ahead.
Brazilian companies are exploring acquisition opportunities in Argentina, cautiously optimistic about President Javier Milei’s economic reforms aimed at stabilizing the nation’s crisis-hit economy. Sectors such as consumer goods, services, oil, and technology are considering expansion plans as Argentina emerges from years of instability that have previously deterred investment.
Milei’s strict austerity measures are reportedly mitigating triple-digit inflation, addressing a significant deficit, and rebuilding reserves, thereby raising investor confidence. However, the country remains in a recession, and existing capital controls pose challenges to business operations.
Rodrigo Stefanini, CEO of Stefanini Group, emphasized that “Argentina is back on the radar,” highlighting the company’s 15% sales growth in the country last year, alongside a 10% workforce increase. The firm is now looking at potential acquisition targets for the first time since its entry in 1996, despite lingering economic uncertainties.
“You do not want to be the first to arrive at the party, because you do not know if it will be a hit. But you also do not want to be the last, because the drinks may be finished,” he remarked, underscoring the urgency to capitalize on the opportunity before international competitors enter the market.
Proximity and advantages of the Mercosur trade bloc have facilitated earlier recoveries for Brazilian companies during Argentina’s economic fluctuations, although past experiences have resulted in caution among some. Approximately 150 major Brazilian firms maintain operations in Argentina, though many have either scaled back or altered their business approaches in recent years.
Federico Servideo, president of the Brazil-Argentina Chamber of Commerce, remarked that investors are closely monitoring economic trends and potential policy shifts, including loosening currency controls, which could prompt increased investment within the next two to three years.
Petrobras, Brazil’s state-run oil company, is reportedly considering renewed investments in Argentina, having signed a memorandum of understanding with YPF to explore joint ventures in exploration and production. The company already participates in two concessions located in Argentina’s Vaca Muerta shale region and is assessing further opportunities.
CVC Corp, a major Brazilian travel group, is expanding its footprint in Argentina, where it has established 42 new storefronts since its initial entry in 2018. CEO Fabio Godinho reaffirmed confidence in the potential of the Argentine tourism market, indicating plans for continued growth within the sector.
Cambuci SA, Brazil’s top producer of sports equipment, recently formed a five-year distribution agreement in Argentina. Chairman Roberto Estefano expressed interest in re-entering the Argentine market in the future, viewing it as a vibrant opportunity due to its sizable population passionate about sports, despite prior setbacks due to shortages and currency issues.
Eduardo Kunst, CEO of the Brazilian chemical manufacturer Artecola, noted that although the company suspended production in Argentina in 2023 due to high costs, they still maintain sales in the country. He remained hopeful that if Argentina’s economic path continues positively, it could regain its pivotal economic position in the region.
Brazilian companies are cautiously returning to Argentina, driven by President Javier Milei’s economic reforms that have begun to stabilize a challenging environment. While investment opportunities are rising, the landscape remains complicated due to recessionary pressures and capital controls. Prominent firms from various sectors are observing economic trends and preparing for potential expansion, signaling a shift in investor sentiment towards Argentina’s future viability.
Original Source: www.usnews.com
