The economic crisis and unfolding disaster in Argentina

The population of Argentina is suffering. The purchasing power of people who still have a job is down (a lot), and unemployment must have doubled (it was 5,7% in the last quarter of 2023) if it has not tripled. Less government spending, less consumer spending, and, no doubt, less private investment means that Argentina is experiencing an economic disaster which will scar the country for decades. Retail sales (volume): down around 20% while, at this moment, people will still be able to use their savings to maintain their standard of living!

About half a year ago, the unreformed libertarian Melei became president of Argentina. His economic recipe: shock therapy (including a HUGE devaluation). The first results are in. Retail sales: down around 20% (volume, year on year). Meaning that scores of shops and supermercados will have to close. Unemployment? I do not know; data are not yet in. In the last quarter of 2023, it was a somewhat highish 5,7%. The labour force participation rate was, however, only around 50%, which is very low and which will only deteriorate because of the crisis.

Big agro, highly connected to the international market and hence de facto selling in dollars, does exceptionally well. In pesos, fortunes are made. According to’ trading economics’, wages, denominated in pesos, were up 13% in January. Inflation was 233%, way higher than in December 2023, and increased to 292% in April 2024, to decrease a little to 276% in May. The fortunes will find their way to Switzerland.

Argentina had a rather small current account deficit, but considering the decline of public and consumer expenditures, which will no doubt be exacerbated by a decline of private investment, this must have turned into a huge surplus.

Yes, less red tape is a good thing. But Milei policies are not aimed at diminishing red tape. They are aimed at selling out the country to capital which, in Argentina, is Big Agro. They will close ranks, suspend democracy, reap rents and retreat to a life of rent collecting and profiteering. Back to July 8, 1816.