But in the economic field, “it will be a return to the policies of the 1990s with deregulation, privatization and the unconditional opening of the economy which will deal a heavy blow to industry and small and medium-sized national businesses,” he estimated.
Austerity and strangled purchasing power
Even before the adoption of this package, President Milei congratulated himself on having achieved “the largest fiscal adjustment not only in the history of Argentina, but also in the history of humanity”.
His government immediately implemented a drastic all-out budgetary austerity programme, with the aim of a “zero budget deficit” by the end of 2024, and thus taming chronic inflation (211% in 2023).
But budget cuts, including the paralysis of public projects, coupled with a brutal devaluation (54%) of the peso in December, have strangled purchasing power. An impact which has repercussions on consumption, activity and employment.
276% of inflation
Inflation in Argentina continued in May the gradual deceleration that began five months ago, to 4.2% over one month, the lowest in two and a half years, but which remains crushing over one year, at 276.4%. .
But consumption and activity are plummeting. Recession is setting in, with the economy contracting by 5.3% in the first quarter compared to the same period last year.
Argentina’s gross domestic product (GDP) contracted by a sharp 5.1% year-on-year in the first quarter, while unemployment now stands at 7.7% of the population, according to official figures released Monday.
