By Eric Beard, writing from Boston
Though Brazil will develop into the decade’s epicenter of South American sport thanks to the 2014 World Cup and the 2016 Rio de Janeiro summer olympics, this summer the spotlight will be on Argentina at Copa América 2011, the continent’s prestigious quadrennial international tournament. Los Albicelestes did not live up to their expectations in South Africa 2010, however, this time around Argentina are on home turf and do not want to disappoint. Lionel Messi said, "2010 was a good year for me personally, but the World Cup didn’t go the way I wanted… Now I have the aim for Argentina to win the Copa America next year, as we’ll contest it at home."
But beyond the battles on the pitch there is another fight going on in Argentina. CONMEBOL and the Argentine planners of Copa América have to accommodate for the tournament amidst the nation’s double-digit rate of inflation. 10 percent inflation would be disastrous in the economy of your average developed nation, yet the Argentine economy currently has an estimated inflation rate of 26 percent and it is predicted to rise to 30 percent over this next year.
In the past year, the Argentine government has become notorious for not releasing information about the actual inflation rate in the country. The reason for this seems to be because revealing the real inflation rate could possibly spark a recession and given that Argentina President Cristina Kirchner is up for re-election this year, a recession would likely kill her campaign. But it’s not all bad news having an inflation rate like this, especially for those who have money.
Many Argentineans are habitually buying everything from property to automobiles to flat screen televisions to cell phones because they are safer investments than placing faith in the Argentine Peso. For example, if you purchased a house that was to be paid over five years at a 15% rate of interest, you would actually save money compared to what you originally paid in the long run because the inflation rate is greater than that interest rate. The Argentine willingness to consume has never been higher for precisely this reason, despite the fact that these consumption trends only contribute to more inflation in the long run.
Argentina’s valuation of its peso has dropped dramatically this past year.
Before you cancel your kayak ride in Patagonia, let’s put things into perspective. This Argentine phenomenon of inflation is not anything new for the country, nor is it comparable to the hyperinflation experienced in countries like Zimbabwe. The fan’s social experience of Argentina 2011 will surely set the standard for South American tournaments, especially after a subpar Copa América 2007 in Venezuela. But for organizers trying to run an efficient, stable tournament that will likely draw tens or even hundreds of thousands of tourists, inflation means logistical chaos.
Who knows how the going price for a ticket to a stadium like the legendary Estadio Monumental Antonio Vespucio Liberti will fluctuate? Don’t look at me…
Whether it is currency conversion rates, ticket prices (bought from stadiums or scalpers), or simply booking a hotel and eating at a restaurant, traveling with a currency like the ever-weakening Argentine peso spells trouble for creating a tourist-friendly atmosphere. Local Argentineans, if they’re business savvy enough, will quite rightly take advantage of the fact that there is no concrete, universal value for the peso by upping the inflation further. Will it compromise the tournament? Of course not. But if you have already booked your tickets for the summer (or Argentinean winter), then be sure to create a plan of action around the inflation woes. Theoretically, the longer you wait the weaker the peso will become, but I would certainly do more research before making that gamble.
(All credit to “The World" for inspiring this)
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