Less than a month before the general elections of October 27, the focus of all local and foreign actors is on the financial situation that will be inherited by whoever wins the Presidency. The new Government will receive a country in crisis, with productive sectors hit hard.
The crisis in Argentina was already a hot and worrying issue before the primary elections of August 11, but the results – which left the president, Mauricio Macri, 16 percentage points below the opposition candidate, the Peronist Alberto Fernández – transformed a management that He was facing a storm, in a ship that is sinking.
This week, the National Institute of Statistics and Census (Index) announced that poverty in Argentina reached 34.5% of the population in the first half of 2019, but those numbers still do not record the impact on access (or limitation ) to the basic basket of goods and services that society lives from those elections.
Faced with a scenario of political uncertainty and with the drag of a galloping recession, these are five of the most alarming red numbers of the Argentine macroeconomics that will become the nightmare of those who celebrate – if there is anything to celebrate – last night Sunday of October.
Currently, inflation in Argentina is higher than that of the other 19 main countries of the continent together. That chronic and uncontrolled disease that the country has had for more than a decade was 48.7% in 2018, and the interannual year of August was 54.5%, more than most of the continent’s economies add up, except for Haiti and Venezuela.
The Friday before the primary elections, the country risk index carried out daily by the financial bank JP Morgan was at 876 points; 86% catapulted the following day, August 12, to 1631 points and reached a peak of 2,471 points towards the end of that same month. It is currently close to 2190 points, the second-highest in the world. Compared to the countries of the region, Argentina is very high: Peru (116), Uruguay (179), Colombia (188), Mexico (221) and Brazil (252).
“Due to the uncertainty, all types of investment in Argentina are now held back until it is defined not only who will be in the Government but also the policies that that Government carries out,” economist Nicolás Litvinoff, director of the education site, told Sputnik Financial Estudinero.net.
The day after the primaries, the Argentine peso lost 25% of its value in one day as it went from trading with the dollar around $ 45 to more than $ 60 pesos, where it remains. Since then, the Central Bank has made injections of its reserves to stop the runs but finally the
The government decided to intervene in an unexpected way through exchange controls and the obligation to settle exports in the local currency market.
“It seems difficult to me that the dollar has found stability, although the stocks somehow slow the flight of currencies, the situation remains very delicate. The issue of external restriction causes dollars to be scarce and the projection is that it will continue to rise, even more taking into account the commitments that Argentina has to face in terms of payment of foreign currency debt, ”Litvinoff said.
The Central Bank lost more than 15,000 million dollars from its reserves since the elections, not only in the auctions to contain the exchange rate but in payments of letters, bonds, compulsory loans, withdrawals of investors and interest on Treasury debt.
During the weeks after “Black Monday” on August 12, the value of the shares of Argentine companies, calculated in dollars, fell by 60%, according to the S&P Merval index, which represents the Buenos Aires stock market. Local banks and energy companies, which are in turn the main and most numerous, were the most hit.
“It was the biggest stock market drop in a single day when they fell 48% and what happened was that the market anticipated what was the re-inflation of debts with the IMF, among others, and that the country was in a kind of political ‘limbo’ until the October elections, ”explained the economist.