Argentina, one of the major economies of South America, has been struggling with economic difficulties for a long time. One of the biggest threats facing the country has been high inflation. Argentina’s economic picture is shaped by a number of factors, including exchange rate fluctuations, debt problems and domestic political uncertainties. In the complex fabric of the Argentine economy, the effects of inflation are not limited to economic indicators, but also have a profound impact on daily life. The country’s stability is also threatened by this situation. The economic crisis in Argentina is deepening inequality in the country.
The Argentine Statistics Office said in a statement that annual inflation reached 142.7% in October, while the monthly increase slowed to 8.3%, but this is lower than the peaks in August and September and below analyst forecasts.[1]
For years, Argentina has been struggling with high inflation, which economists blame on money printing and distrust of the local peso. Although the official currency in Argentina is the Argentine peso, the economy is often based on the US dollar. In particular, high-value purchases, such as real estate, are often made in dollars. However, there is a significant difference between the official and unofficial exchange rates. There are 15 different exchange rates, ranging from around 360 pesos per dollar at the official rate to around 1,000 pesos per dollar at the most commonly used unofficial rate.[2] Inflation accelerated last year, reaching its highest level since 1991.[3] According to official figures, 40% of the country lives below the poverty line.[4]
On Sunday, November 19, 2023, Argentina will find out who will be its next leader. Polls predict a very close race for the presidential election. Opposing Sergio Massa, the ruling party’s candidate, is Javier Milei, an ardent libertarian and political outsider.
Javier Milei began his career in Argentina as a popular television talk show host who captured the public’s attention by linking the country’s economic problems to the government. His commitment to anarchist and capitalist ideals and his quirky style and outbursts have created a fan base. Milei is often referred to as the “Donald Trump of Argentina”. He tries to impress his supporters with “Make Argentina Great Again” hats and T-shirts, referring to the slogan “Make America Great Again”.[5]
In a departure from traditional policy, Milei advocates the closure of the central bank, the dollarization of the economy and the privatization of the pension system. Despite these radical proposals, Milei’s support is strong, especially among those who distrust the policies of the current Economy Minister Sergio Massa.
In October, after Milei called on Argentines to sell their pesos and buy dollars, the value of the peso plummeted. This allowed Milei to secure a significant share of the vote in the primaries in 2021. The government has implemented various policies to control prices, but coupled with large price differentials, things have become quite complicated.
Argentina’s economic situation is also likely to affect the elections. In the October vote, he lost his first-past-the-post advantage, falling behind Economy Minister Sergio Massa. On November 19, 2023, they will face each other again in the second round. The current economic environment marks a critical moment in determining Argentina’s future in the presidential elections on Sunday, November 19, 2023. Be that as it may, Argentineans expect a decisive step for their country’s economic future as they struggle to live their daily lives with the uncertainties created by inflation.
[1] Miguel Lo Bianco-Claudia Martini, “‘Can’t buy new jeans’: Argentina inflation hits 143% as shoppers tighten belts.”, Reuters, https://www.reuters.com/business/retail-consumer/cant-buy-new-jeans-argentinas-100-inflation-draws-crowds-used-clothes-markets-2023-11-13/, (Erişim Tarihi: 15.11.2023).
[2] Josefina Salomón, “How Argentina’s hyperinflation could clinch election for far-right Milei.”, The Guardian, https://www.theguardian.com/world/2023/nov/14/argentina-president-election-javier-milei-inflation-economy-conservative, (Erişim Tarihi: 15.11.2023).
[3] Same place.
[4] Same place.
[5] “Populist Javier Milei İs Rallying For The Argentine Presidency With Chainsaws And Comic-Con Costumes.”, AP News, https://apnews.com/article/argentina-javier-milei-election-ea4b2b181ab98a60a9dc96572c27005b, (Erişim Tarihi: 15.11.2023).
