Between economic stability and social unrest, is Argentina's future at stake?

People line up for free hot meals outside a soup kitchen run by the Excluded Workers Movement in Buenos Aires.

Millay finds his political support mainly in the younger segment of the population, which allows him to present himself as a disruptive president and a break from the traditional political class. The support of these youths is evidenced by his victory in 16 provinces during the 2023 primaries. With this support, Miley has established himself as a refreshing political personality capable of making a radical change in the country's political landscape. Although The next few months could be economically turbulentWith adjustments in particular, Miley's support base among the youth will mitigate the political consequences of these moves and make the political landscape more manageable in the short term.

Despite critical opposition, President Millay faces one of the biggest challenges of his administration: The Absence of effective public policies In an economic environment marked by labor informality. The prevalence of undeclared work, the presence of unregistered workers and the extensive informal economy represent significant obstacles to achieving the economic and social stability that all Argentines desire. This situation compromises the tax collection needed to fund public policies and perpetuates job insecurity and worker vulnerability.

In general, according to the consensus among international political analysts, Argentina is considered the least relevant country in the world, mainly due to the relatively small size of our economy compared to other world powers. With this view, even though 42 years have passed since the last war (Malvinas in 1982), the country faces a bittersweet one. Significant penetration of drug trafficking. The problem has been exacerbated by the lack of tolerance and effective policies of previous populist governments, especially in an environment where the informal economy provides fertile ground for the growth of illegal activities, including the fraudulent financing of some politicians.

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In the 2023 elections, Argentine society expressed a deep weariness with the traditional political class (“caste” in libertarian terms), reflecting more than a decade of economic stagnation. This dissatisfaction was highlighted A vote marked by satisfaction. In addition, the country is witnessing a generational shift where the youth show more conservative tendencies than previous generations, implicitly rejecting an inherent entrepreneurial culture and “planner” culture. In this context, Millay's rise to the presidency was the result of a combination of factors: an economic vote and a vote to reject traditional politics. His message of independence, especially after a period of confinement due to the Covid-19 pandemic in 2020/2021, served as a catalyst for the libertarian vote, consolidating his leadership and creating a cult of sorts among his original electorate. He got 30% in the first round of the 2023 elections.

Between economic stability and social unrest, is Argentina's future at stake? It's not yet known, but there are some signs that point us toward what's to come. Despite being a libertarian president, Miley has shown remarkable pragmatism in her governing approach. Its present method is a Extreme orthodoxy in the management of economic variables. While some say this approach may have political costs, Mili appears willing to pay them to switch from a populist economy to a more traditional one, which could be an important step on the path to the normalization many Argentines hope for. However, the success of this endeavor depended on Millay's ability to translate its ideas into concrete and sustainable principles.

President Javier Mili

Miley's current strength lies in her considerable acceptance among the masses, even after the difficult economic adjustment the country is experiencing. This support is based, in part, on citizens' recognition of the imperative to undertake deep economic reforms in response to the shortcomings of previous administrations. Milei faces a unique opportunity to demonstrate its ability to control inflation, one of the most pressing challenges of the Argentine economy. It is plausible that the future may see a significant decrease in the inflation rate, which may reach single digits and decline. This potential success in controlling inflation could further consolidate its position and support among the masses.

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However, as always, the future holds additional challenges. Miley should handle everything with extreme caution and pragmatism Restructuring of public service rates, which is significantly lagging behind. This balance is important to prevent efforts to reduce inflation from being compromised. If you successfully cope with this task, you can wait for the long-awaited agricultural harvest export to begin in June. With these two variables in place, the possibility of approaching a country that at least resembles a normal nation is a tangible reality.

In this context, for Argentina to return to normality, it is necessary to organize funds at the national and provincial levels. Miley has been instrumental in driving this effort nationally, but it's important to recognize that her action, while necessary, is not enough. However, by taking steps to streamline the accounts of the national government, Miley puts pressure on governors So they act accordingly. Some governors do not act according to their own convictions and in the face of reduced funding from the national government, it is necessary to implement this adjustment and financial system in all sectors of government due to necessity. The foundation of an economy is very stable and stable in the long run. Ultimately, this joint effort between the national government and the provincial governments is essential to pave the way towards a normal and prosperous nation.

In Argentina, federalism is entrenched Federal Cooperatives Act, It creates a complex relationship between the national government and the provinces, exacerbating the disparities between them. This situation complicates the path to normalcy with a stable economy and clear and lasting rules. Argentine federalism is more like a bumpy road than a well-paved highway, complicating the normalization process. Despite these challenges, it is important to highlight that for the first time in decades, the country is reversing course and moving towards a goal closer to normalcy.

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So far, markets have supported Miley's policy, due to his firm commitment to reducing the fiscal deficit, which incurs social costs. The process of de-inflation will continue in the coming months, leading to a reduction in country risk and a decline in the value of national bonds, factors that support the president's aim to stabilize the economy by raising the exchange rate. Markets see this process as a virtuous circle that contributes to financial stability. However, the challenge lies in the time it takes for the real economy to adjust, creating a significant slowdown and impacting wage-earning sectors. Community patience will be crucial in the coming months. In short, economics is a deciding factor and if the storm can be weathered, everyone will benefit. Ultimately, as has been said before, “It's the economy, stupid.”

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