Argentina May Be Facing Recession

Chronicle (Levin), 13 January 1949, Page 3

Argentina May Be Facing Recession

(N.Z.P.A.-

-Reuter,

Covuright)

Received Wednesday, 7 p.m. ' LONDON, Jhn. 12. The Argentine is now entering on a new phase in the development of her post-war economy, says a eorrespondent wrting in the Finaneial Times. The new situation which faees her today has two diffexent though interdependent aspects. Firstly, there is the . beginning of a fall in world prices of several agric.nltural commodities whieh must affect the Argentine in comrhon with other' producei'S. , Secondly, there is a general expansion of world supplies whieh has special implications for the Argentine alone. Slnce she provided the marginal supplies. during a period of acnte. shortage —and ' charged maximuni marginal prices for them — she is also likely to be 'the source from which buyers will cut their purchases first of all. This process has already begun. For several months increasing difficulties have been experienced in disposing of the exportable surplus of wheat, the eorrespondent says. European conntries, until the middle of last year the chief overseas outlet for Argentine wheat, are covering their immediate needs in the United States and elsewhere. The same developmenc has occurred in the eoarse grains trade though here Argentine has been prateeted from the immediate effects of a decline of the sellers ' market, by its contraet with Britain under the Andes agreement. Serious difficulties have also emerged in the marketing of linseed oil and Argentine trade in this eommodity is practically at a standstill at the moment. The eorrespondent says there is no promise of anjr immediate improvement in future for Argentine 's grain position .and her main problem in the forthcoming negotiations. with Britain, will be how to get rid of her grain. She has beeome heavily dependent m the British import market for graine ani there is no prospect that she will be able to do without it. Meanwhile her mueh reduced reservn of gold and dollars continues to dwindle. The eorrespondent also says that even if Argentine meat shipmenls to Britain had been up to scliedule, thqir cost would not have been the main constituent element in the British import bill during 1948, for grains and other feeding items would have been the largest.