BUENOS AIRES, Argentina — In a country that endured two economic crises in less than three decades, no one wants to hear any more talk about economic calamity.
But as the threat of another global financial crisis looms, Argentina is starting to acknowledge that it, too, risks economic misfortune.
Brazil, Latin America’s largest economy, grew at a robust rate of 7.5 percent in 2010, but this year its growth has declined to 3.8 percent, according to the International Monetary Fund. There are already signs that consumer demand may be weakening as inflation fears, high lending rates and the unpredictable global situation take their toll on the economy.
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The fear is that if Brazil — Argentina’s closest trading partner — can’t escape the global problems, then Argentina won’t either. A slowdown in the Brazilian economy is likely to reverberate throughout Argentina.
Slower economic growth in Brazil and a cutback in consumption would hurt Argentina, said Riordan Roett, director of the Western Hemisphere Studies program at Johns Hopkins University. “Brazilian demand has been very important for Argentine products.”
Since it defaulted on more than $100 billion in debt in 2001, Argentina hasn’t been a major international player, and so is less directly exposed to volatility in global markets. But Brazil is an emerging power and Argentina’s strongest link to the rest of the world.
Argentina sends many of its manufactured goods to Brazil, and it could even knock off the United States as Brazil’s second-largest trading partner this year, behind China, said David Fleischer, a political science professor at the University of Brasilia.
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“The worst-case scenario would be if growth in Brazil began to slow,” the head of the Argentine Industrial Union, Jose Ignacio de Mendiguren, said earlier this month. How the crisis affects their economy “is very important to us. We pay a lot of attention to what goes on.”
Argentina sells cars, grains, plastic, steel and other materials to its northern neighbor. Vehicles make up the largest percentage of its exports, with Argentina sending about 80 percent of the cars it exports to Brazil.
But car exports fell more than 11 percent year-over-year in September.
Fiat Argentina said this month it would temporarily suspend 400 workers, and Renault Argentina is also reported to be considering suspensions. In both cases, the autoworkers unions said the cutbacks were due to excess inventory in Brazil. (Fiat quickly reversed the suspensions and Renault says nothing has been decided yet.)
Other branches of the Argentine economy are also showing signs of a slowdown. Leading textile manufacturer Alpargatas Argentina suspended 2,500 workers for a week because of poor sales.
In addition, the devaluation of the Brazilian currency — which fell 15 percent in September —makes Argentine products less competitive, at the same time that slower growth means Brazilians are less likely to open their wallets.
Such a situation is not without precedent, said Carlos Germano, a political analyst in Buenos Aires. In 1999, the Brazilian currency plummeted, leaving Argentine exports vastly more expensive and contributing to the devastating crisis two years later.
But Germano said Argentina had learned its lessons and he doesn’t believe it would repeat the same mistakes again. With acceptable levels of debt and a strong domestic market, Argentina is still relatively well protected.
Falling commodity prices or weakening demand from China could cause further troubles, but the government has maintained that it is poised to act to counter any problems.
“We must be very careful that there is not a drop in world trade. Argentina is selling much to the world,” Argentina’s deputy economy minister, Roberto Feletti, said this week, in one of the first admissions by a government official that Argentina might not have escaped unscathed from a global downturn.
If there is a drop in international demand, Feletti said, Argentina will have to replace foreign sales with domestic demand and trade with regional neighbors, like it did during the 2009 crisis.
As for the other countries in the region, “everybody is on their own bottom,” Roett said. “It depends on what their capital reserves look like so they have an opportunity for countercyclical decision-making.”
President Cristina Fernandez de Kirchner defended her government’s economic model this month when she announced a new strategic industrial plan.
“We have built macroeconomic conditions that under these turbulences allow us to stay firm,” she said. Kirchner is almost certain to win a second term in upcoming elections. “Adjustment recipes only lead to recession,” she said, and Argentina’s “challenge is to keep on defeating the inertia of those who said that the 2009 hurricane would take us down."