There are a number of additional big-picture positive trends at work inside and outside Argentina, which with luck will counteract the worst impact of the tax hikes. The corporate sector was spared direct tax hikes. Labor taxes are falling. In effect, this opens up a large loophole for the hiring of temporary, low-tax labor. The Brazilian and Chilean economies are strengthening, which should help exports.
Soft commodities appear to have bottomed and have been recovering a little in recent weeks.
The deflation appears to be easing. The prime cause of the 1998 recession unquestionably was deflation in the U.S. dollar. While significant reversal of that deflation is not in the cards, economic agents can begin to recover simply with stabilization of the unit of account at the new, lower level. Rising U.S. interest rates are an important risk factor. Argentina's benchmark interest rates remain heavily dependent on decisions made by the growth-phobic U.S. Federal Reserve.