Argentina – the crisis in six graphics

Argentina is once again looking at an economic crisis.

The currency is slipping, inflation is rising and a recession could occur.

The International Monetary Fund (IMF) grants an emergency loan.

Everything is happening under a government that has been seen by the international financial markets as offering new hope to Argentina, a country that, under the leadership of President Mauricio Macri, has opened the prospect of stability and stability. of a sustainable economic policy oriented towards the market. century of poor performance.

We examine six factors that contributed to the crisis.

The peso falls

The year was difficult for the Argentine economy and the national currency, the peso. Almost all emerging market currencies are down due to rising interest rates in the US, which encourages investors to transfer money there.

But the peso has declined more than any other.

Argentina has the history of the IMF

Once again, Argentina turned to the IMF for financial assistance in the event of a crisis.

He agreed to lend to Argentina a total of 50 billion dollars. Going to the IMF is a controversial decision, especially in Argentina.

IMF support usually accompanies conditions such as unpopular austerity. Many Argentineans have accused the IMF of the previous crisis in 2001. And there is a story. Argentina had its first IMF program sixty years ago.

Disordered finance

The loss of confidence of international investors reflects concerns about whether the government can repay all its debts and borrow the new funds needed to finance its expenses.

When President Macri took office at the end of 2015, the fiscal deficit – how much more he spends on tax revenues – was important. He wanted to reduce it but adopted a progressive approach to economic reform.

There is also a growing deficit in the country's international trade (or, strictly speaking, its current account). This must be financed by foreign borrowing or investment, which is becoming increasingly difficult at a time when US interest rates are rising.

In fact, the deficit has risen slightly, putting Argentina at risk because of everything that might encourage investors to withdraw their money.

Soaring inflation

Argentina's long-standing inflation problem is another element of the crisis. The most recent figure is about 30%. It is one of the highest in the world, but not exceptional in the history of Argentina.

There was a period of relatively moderate inflation in the 2000s, but it did not last. (There is a gap in the chart, where the IMF thought official inflation figures were unreliable).

The economy (GDP in the graph) rose sharply in the years following the previous crisis in 2001-2. But his recent performance has been more uneven. In the long run, Argentina's performance has been disastrous.

One hundred years ago, it was richer than many countries in Western Europe, in terms of economic activity (GDP) per person. Now, it's less than half the levels of France, Germany and the United Kingdom. The past century has been described as "one of the most curious stories in the annals of modern economic history".

Interest rates are skyrocketing

The central bank has sharply raised interest rates to stabilize the peso and control inflation.

This is painfully high for consumers and businesses that want to or have to borrow.

Even if the IMF bailout and government reforms work, it seems that Argentina is once again in a torrid period as it seeks to weather a new economic crisis.