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Argentina is a country that destroys any economic forecast, even the most pessimistic. In December 2017, the government of Mauricio Macri badumed that the target of 10% inflation forecast for 2018 was inaccessible and brought it to 15%. With the 3.7% rise in the June CPI, this forecast was broken: Argentine inflation rose 16% in the first half, and it is expected that December will ends above 30%. The June index, presented this Tuesday in Buenos Aires, felt the impact of the currency crisis in May, when the peso lost nearly half of its value and as the irresistible rise of the dollar s & rsquo; Is moved to prices. The fight against inflation is already Macri's most complex battle, aimed at reaching increasingly tight targets after the $ 50 billion financial bailout that Argentina has received from the IMF.
Argentina is a country devastated by inflation more than a century ago. In 1989 broke all records with a CPI of 3079%, during the hyper of Raul Alfonsin, but the economy has already added significant numbers since the mid-50s. The period of greatest stability was the result of the convertibility of the peso with the dollar imposed by Carlos Menem in the 90s, until the model explodes in the air with the crisis of 2001 and the corralito. Kirchnerism was undergoing a first phase of inflation, but the CPI was again up 20% per year from 2007. When Macri came to power, he pledged to control the rise in prices. . The beginning of the management was not promising: 40% of inflation in 2016 and 24.8% in 2017, nearly 50% more than what had been promised for this year. If projections are confirmed, in 2018, it will double the target set last January.
According to the commitment made by Argentina with the IMF, inflation should be this year between 25 and 32%, an objective that may be overcome if you do not make great efforts . The Indec, the official statistical office, measured 3.7% inflation in June, 16% in January and 29.5% in one year on the other. The item that contributed the most to the rise last month was food and beverages, with 5.2%. It was where the impact of the rising dollar recorded between May, when the currency went from 23 pesos to 28 pesos per unit, and June when it peaked near 30 pesos.
The scenario is not the best. To contain rising prices and the dollar, the Central Bank chose to calm the economy with a monetary brace that brought interest rates to 40%, the highest in the world. At the same time, it is bound by its commitments to the IMF to reduce the budget deficit to 1.3% of GDP in 2019 and move towards a balanced budget by 2020. The underlying problem is is still inflation. To end the escalation, Macri has opted for a combination of high rates, monetary restrictions and adjustment of state spending, all recessive measures that predict weaker economic growth than expected before the crisis. IMF forecasts for Argentina went from 2.5% in January to 2% in April. In the update presented last Monday, the Fund indicated that the change in outlook was "a reflection of the need for adjustments".
This need is what Macri removes from sleep, because it is not just an economic problem. The government is forced to negotiate with the provincial governors which items will be cut, ie which sectors will pay the cost of the crisis. The moment can not be worse: in October of the year there will be general elections and Macri aspires to renew his mandate. If, before the crisis, the electoral horizon was clear, the president now knows that his chances of winning depend on the revival of the economy. It is only then that he can defeat Peronism, engaged in an accelerated process of reorganization (Www.elpais.com)
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