• Wed. Feb 21st, 2024

The New Economic Cycle in Argentina: A Promising Start, But Challenges Ahead.


Feb 10, 2024
Strengthening the Adjustment and Holding Firm Against the Dollar

The adjustment of the Argentine economy, led by Minister Luis Caputo, has been met with mixed reactions. On one hand, Javier Miley is pleased to have Caputo on his team and believes that the president allows him to act. On the other hand, some argue that the decision to eliminate subsidies for urban transportation in the provinces was controversial and led to a political failure for the ruling party. Despite this, stock prices and bonds did not fall as expected, leading some economists to question whether the market truly believes that achieving a financial surplus is a priority.

The new cycle of economic adjustment is characterized by a sharp drop in sales since the beginning of the year, following what was known as “the price stampede” after December’s devaluation. To attract customers, discounts of up to 70% are being offered on supermarket items and special deals are being made for retirees. This adjustment is having a strong impact on families and raises questions about how much recession will be necessary to lower inflation rates.

The dominant view in economics is not only to maintain the fixed exchange rate policy but also deepen the use of the dollar as an anchor in an attempt to moderate price increases. While some agree with this approach, others argue that it could lead to currency fluctuations and economic instability.

In relation to health care, there is no mention of it in relation to previous topics discussed in this article, so I am unable to rewrite it at this time.

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