Sofia Mercado
As one of the largest economies in Latin America, Argentina has a strong workforce and many natural resources. However, despite all these advantages, the economy has been in a debt crisis since the 20th century.
The annual inflation rate is more than 230%—the worst in the world. This rate has affected the people of Argentina significantly. The poverty rate skyrocketed within the first six months of the new president, Javier Milei. How can a country be run if people are unable to find jobs and purchase food? Can Argentina get this number lower? Is it possible for Milei to help people without hurting the working class? The article aims to show the struggle the people have been dealing with alongside the statistical importance of this issue.
Argentina is facing an extremely pressing economic issue: uncontrolled inflation. In recent years, even the prices of everyday goods like hair products and toothpaste have gotten so high that swaths of working-class Argentinians cannot afford these necessities.
AP interviewed an Argentinian citizen named Rocío Costa about the rising prices. She says that since July, she hasn't had enough money to purchase diapers for her four-month-old child. She has five children and is unable to provide food for them. The government has offered food, but it is impossible to determine if providing these means is enough. With these drastic changes, Argentinians can't afford day-to-day life, and the poverty level keeps rising. The inflation has forced middle-class Argentinas to cut back on spending and dip into their savings. As compared to before, poverty rates were at 11.9%, and within the first six months of Milei running, they jumped up to 18.1%.
Finding a job during this period has also been very difficult for Argentinians. Since household items have fallen out of reach, people have turned to the municipality of Buenos Aires for help. However, before these changes could fully take effect, there were still many difficulties and widespread suffering.
For decades, low-paid Argentines have been navigating the economy with meager incomes and small basic government assistance. They were provided small sums of cash and discounts on utilities alongside transportation and food. Yet now, because of this hyperinflation, many more people now require this help.
Utility bills have jumped dramatically. As AP reports, Argentinian citizen Sofia Gonzalez Figueroa is a 36-year-old single mother who was paying $10 a month last year for rent, and after Milei took office; her bill jumped by 830% to $8300. She was forced to join the government’s family welfare program. She says that even the little welfare that is provided is not much help. Most citizens, however, do not qualify for assistance and have turned to side hustles just to pay bills. Lab technician Emilce Correa had to pick up extra shifts. “By the middle of the month, I already have nothing,” she says.
The Argentinian government found that the half-year poverty rate had risen to the highest level since 2003. The country is trying to recover from a catastrophic foreign debt crisis, a situation in which a country is unable to pay off its debt and cover international and national loans. Argentina owes the International Monetary Fund 43 billion dollars, a sum that has greatly contributed to the monthly inflation. Last December, it was 4.2%, and now it is 25.5%.
Past government officials have tried to keep consumers spending even when the country was in massive debt, yet Milei is doing something different. After taking office in December, he has significantly cut down on energy usage and transportation. Doing so has reduced the value of the Argentine Peso reduced by 54%.
This change was made to help sedate the yearly inflation rate, which peaked at almost 300% in April. These changes intend to affect the annual inflation rate and cause it to drop 122.9% by the end of the year. Yet this wouldn't be easy since the monthly inflation has been stuck around 4% since July. Milei’s budget plan aims to fix this issue and hopes to stabilize the annual economic output. However, for this plan to work, further spending cuts must be made, and the wages need to grow.
Argentina is a complex country with a complex problem and a high population. So, if the government makes these drastic changes, it also needs to look out for the populous. Without the people being properly accounted for when implementing these changes, it is hard to stabilize a countries country. Milei has a positive outlook on these economic changes and believes the country simply needs more time to recover from the disaster the previous President left it in.
In summary, Argentina’s economic crisis results from being overburdened with a still growing debt they are struggling to pay back; however, with the continued expansion of the social welfare system and the public now getting the support they need, some improvement might be on the horizon.
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