Hobbled by recession and one of the world's highest inflation rates, Argent...
BUENOS AIRES - Hobbled by recession and one of the world’s highest inflation rates, Argentina may be lurching toward the next in a series of economic crises afflicting the country over the last 70 years.
He hired a cabinet of technocrats who promised to use orthodox policies to bring down inflation, attract waves of foreign direct investment and put the country on track toward sustainable growth. As useful as Macri’s budget cuts were on the fiscal side, they had an unintended effect on people who had long taken the subsidies for granted. Every time a water, electricity or home heating gas subsidy was reduced, people’s monthly utility bills rose.
When the United States raised interest rates last year, money started flowing out of Argentina and other riskier emerging markets. All this pressured the peso, prompting the central bank to increase interest rates, which further weighed on the economy. A noxious circle of fear, low private investment, recession and inflation deepened.
Meanwhile, the central bank’s reference interest rate, the one it gets for issuing short term notes, shot to over 74 percent, choking off what little credit there was for businesses and households.Some Argentines have starting to look back fondly on the tenure of Fernandez. She remains popular among low income voters who benefited from generous welfare spending during her 2007-2015 administrations.
A general view of the Villa 31 slum, in Buenos Aires, Argentina April 30, 2019. REUTERS/Agustin Marcarian
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