South America still a 'go'

By CHRIS DANIELS

Exporters are being warned not to let economic turmoil in Argentina put them off the huge growth potential available in South America.

The Government trade promotion body Trade New Zealand has published a statement designed to allay fears of financial failure spreading across the continent.

The general manager of market services for Trade NZ, Jack Stephens, said the South American region had been growing dramatically in the past 15 years.

Countries such as Chile and Brazil were becoming increasingly important to our exporters.

Argentina has devalued the peso by 29 per cent to 1.4 per United States dollar in a bid to bring the country out of a three-year recession and make its exporters and manufacturers more competitive.

The crisis in Argentina had started to have an impact , said Mr Stephens.

New Zealand banks were no longer accepting letters of credit drawing on Argentinian bank accounts.

William Wattie, Trade NZ's market services manager at its Sao Paulo office, said that New Zealand exporters were aware that the problems in Argentina had not spread to other South American countries.

Trade NZ said the reason the deepening recession in Argentina was only now being felt in New Zealand was because we exported specialised products there, such as industrial Machinery, building materials and electrical equipment, that were still needed despite an economic contraction.

This situation had changed, with Argentinian importers, including those that distributed goods for New Zealand companies, now unable to transfer funds to pay their commercial transactions.

Argentinians have not been allowed to withdraw more than $US1000 ($2344) out of their accounts each month, so payments for export deals were not being made.

The coming year would be difficult for Argentina, with GDP growth possibly again negative, said Trade NZ.

But New Zealanders wanting to trade with the country should not be concerned about their safety when visiting that country.

"Trade New Zealand staff in Buenos Aires report that the heated confrontations between protesters and police in recent weeks have fallen away greatly as the general public wait to see the results of the new economic measures.

"A visit to the market poses no risk."

Trade NZ data shows exports to South America earned New Zealand more than $500 million in foreign exchange in the year to last June.

Dairy exports made up two-thirds of this total, but non-dairy trade grew almost 25 per cent in 2000 and 2001.