Gray Newman and Luis Arcentales of Morgan-Stanley commented yesterday on Argentina's impressive GDP growth for 2003 and 2004, revising their projections to 7.2% this year and 6.0% in 2004 (higher than their last estimates, while still lower than the Argentine government's). While they, I think, underestimate the political importance of the fiscal income levied out of exports, they make the very interesting point that so far growth in Argentina has been fueled by the output gap left by the drastic contraction at the end of the Menem and de la Rua's administrations, with relatively little investment done.

There is only one point they make that I'm quite certain is basically wrong, and I quote: "While it is difficult to imagine that policy makers or politicians can mistake the bounce-back in 2003 as the beginning of a sustainable growth path (...)". I think that it's great that Morgan-Stanley personnel can keep up their good spirits and optimism after having had a pretty rough week, but in all fairness I have to add that there is little limit to what Argentine policy makers or politicians can mistake a bounce-back for when it's in their political advantage to do so.