09:38 12.31.2019 (updated 10:28 31.12.2019) Short URL
Over the past ten years, Argentina has been unable to lower double-digit inflation and to control the progressive deterioration of indices such as GDP, foreign debt, fiscal deficit and trade balance.
What started as a stagnation is now a serious recession. The Sputnik World has invited Argentinean economist Nicolás Dvoskin of the Society of Critical Economics to analyze the latest governments in the neighboring country.
There were two consecutive years of a fall in Gross Domestic Product (GDP) of at least 2.5%. Now, the emergency fiscal adjustment implemented by Argentine President Alberto Fernández seeks to generate financial stability.
"In the last decade, Argentina has been subjected to the historical problem that is the external restriction, the lack of dollars", summarized the economist.
"Exports in the country are very insensitive to what goes on locally, they usually export what the world wants to buy, and imports depend heavily on economic growth and domestic policies," he added.
It can be seen that the evolution of Argentine GDP since 2008 is a "rise and fall". The repercussions of the 2008 world crisis did not affect the local economy as much as the South American country was relatively isolated from international capital markets. However, it has begun to suffer from lower external demand for commodities due to the recession and the consequent impact on their prices.
The economy during Kirchnerism
"In 2009 begins a period of slowdown, when the economy is asking for more dollars to continue growing. Historically, the exit has been devaluation, but the rise in the price of the dollar leads to rising prices and inflation, which leads to regressive redistribution. because it diminishes the purchasing power of the majority of the population, "Dvoskin explained.
One of the main criticisms of the government of former President Cristina Fernández de Kirchner (2007-2015), even by the current president, is the intervention since the beginning of his term of office of the National Institute of Statistics and Census (Indec), which reduced confidence in the management of public data on poverty, but especially on inflation: since the first year of his presidency, private consultant figures (on price increases) were twice as high as official figures (14.8% versus 8.5%).
The economist described the last four years of Kirchnerism as erratic. GDP rose in odd years, but fell in even years, with an especially bad 2014. Wages in boom years often outpaced inflation thanks not to parities and nontraditional control mechanisms (alternatives to devaluation or monetary adjustment), but through state intervention policies and greater regulation of price chains.
Macri-era economic policy
Mauricio Macri received in December 2015 a country with strict exchange control (which left almost immediately), an official dollar at nine pesos and a parallel to fourteen, an annual inflation of 25% (there was a peak of 38% in 2014), $ 27 billion ($ 108.5 billion) in Central Bank international reserves, a public debt of 43 percent of GDP, and a growing economy.
Macri also suspended the freezing of service charges. Although there is no real economic crisis, Argentina had a year of recession in 2016, with a fall of 2% of GDP, but imports increased, with the consequent outflow of dollars.
According to Dvoskin, the main difference between the last two governments is that in every year of the Macri era unemployment grew and inflation was higher than wage increases, which is why purchasing power has fallen and 40% of the population is currently below poverty line.
At the end of his government in December 2019, Macri created a new exchange control system, with the official dollar at 63 pesos and a parallel near 70 pesos, an estimated 55% inflation, an external debt equivalent to 95% of the GDP, and an economy that by 2019, according to IMF estimates, will contract by 3%.
. (tagsToTranslate) Recent History of the Argentine Economy (t) Argentine Economic Balance Sheet