Argentina: Economy Falls and Unemployment Rises at Start of 2019
Argentine president Mauricio Macri is facing bad economic news as he gears up for his reelection bid.
The administration of Mauricio Macri is facing yet another economic crisis. During 2018, the economy fell by 2.6% and the private sector lost 191,300 jobs. This situation confirms what is readily perceived on Argentine streets: shops that close their doors, companies that are merging or leaving the country, and a loss of jobs.
The economic situation of those who can continue to operate and those who maintain employment is not good. Profit margins are shrinking, merchants complain that it is impossible to transfer to the prices the increased costs with respect to the inputs and the merchandise, and workers perceive month by month that inflation and devaluation are eating away at their salary. While the private sector continues to pay for the adjustments that the public sector should make, the state maintains its privileged economic status. It has not been subjected to an adjustment or correction.
The current discontent was captured yesterday in a televised debate, where Senator Fernando “Pino” Solanas blamed “neoliberalism” for the people in the streets, who have neither a roof nor food. The economist Roberto Cachanosky rebuked him and reminded him that while the private sector is increasingly skeletal, Solanas has a team of 35 advisers. “The senator has, between permanent staff and temporary staff, 35 employees. That is paid for by the taxpayers,” said the economist who oversees the Economic Report.
Going Back in Time
Official figures confirmed that, by the end of last year, there were 6,166,100 registered workers in the private sector. This figure represents a major setback: Argentina has returned to the same level of employment it had in 2014. The little growth the nation had experienced up until 2018 was wiped out overnight during the last economic crisis, which saw massive devaluation of the peso.
Queried by the media, the economic bigwigs of Cambiemos returned to the usual list of excuses: external issues, drought in the agricultural sector, and international volatility. The truth is that these problems are real, but Argentina’s neighbors, who also suffer from these phenomena, are not enduring the very serious anguish that the people are facing in Argentina’s weak economy.
Fall two years in a row
In an interview with the PanAm Post, economist Adrián Ravier warned that this year-over-year fall could mean the second consecutive contraction period, something that has not happened to Argentina since 2011. “In line with what I’ve been doing since 2011, the economy grows in odd years and falls in even years. This has to do with the political cycle and the elections, something that, regrettably, the Government of Cambiemos has not been able to solve in three years of its mandate. The worrying thing is that if this dynamic is broken the economy will fall this year and for the first time since 2011 we would be in two consecutive years of recession.”
According to Ravier, 2018 had a first quarter of expansion, after a 2017 of growth, a second quarter affected by the drought and a third with a very serious currency crisis, boosted by the recommendations of the IMF. In the opinion of the economist, the first quarter of this year will still face difficulties, but the situation should improve in the second with the catalyst of the harvest. “This could allow a rebound in the third quarter, but this depends on the stabilization of the exchange rate.”