'Default' of Argentina will hit tourism Uruguayan and Brazilian factories

'Default' of Argentina will hit tourism Uruguayan and Brazilian factories 

Brazilian exporters from shoe manufacturers to automobile are anticipating lower sales.

Meanwhile, hoteliers and other tourism operators in the popular resort of Punta del Este are preparing for a looser season, after Argentina failed to terms with holdout creditors to allow him to unlock a debt repayment summer.

Failure likely hurt the purchasing power of the Argentine with inflation already exceeds 30% and that would accelerate.

The suffering is acute for the Brazilian automotive industry. The largest economy in Latin America sends 90% of its vehicle exports to Argentina.

"Even before the default was a visible drop in exports to Argentina," said Jose Augusto de Castro, president of the Brazilian Association of Exporters. "With the default we will have a substantial low Who will take the risk of exporting to Argentina?"

Argentina fell into default on Thursday after losing a lengthy legal battle with hedge funds that rejected debt swaps in 2005 and 2010.

Besides putting pressure on the peso and boost inflation, default can raise the financial costs of local businesses and a drain on dwindling foreign currency reserves, which are now under $ 30,000 million.

Clearly, the problems of Argentina hardly translate into a major economic setback for Brazil and Uruguay, the closer relations with neighbors. For Chile, the effect is probably negligible, because only exported to Argentina, although Chilean retailers Cencosud and Falabella have operations in that country.

Brazil exported $ 7,000 million worth of goods to Argentina in June, nearly 7% of total shipments. Argentina's problems could push a little more towards a recession to weak Brazilian economy.

A deeper recession in Argentina could lead to Brazilian factories to cut production and increase layoffs, clouding prospects for a recovery in Brazil in 2015.

Argentina Weak demand will be a challenge for Marcopolo, the largest bus manufacturer in Brazil, which has already cut its production by two thirds in just six months.

A spokesman declined to comment Marcopolo which may mean the default for your prospects. Chief executive Jose Rubens de la Rosa, had said in an analyst conference in June that the persistent uncertainty in the country "clearly" was affecting the performance of the company.

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