Argentina's economy contracted 1.7 per cent in the second quarter compared with the preceding three months, according to the country's statistics agency, which said that sent the embattled South American nation deeper into recession.

Argentina's gross domestic product fell 1.7 per cent year-over-year, worse than analyst forecasts of a 1.4 per cent contraction compared with the year-earlier period.

This is the fifth successive annualised quarterly contraction and the third successive quarter-on-quarter for the South American economy.

Argentina's major agricultural sector led the growth, rising 81.2 per cent from a year earlier, and fishing was up 41.3 per cent. Still, construction dropped 22.2 per cent, manufacturing fell 17.4 per cent and retail activity slipped 15.7 per cent, INDEC said.

The slumps in consumption and private investment continued, INDEC said, even though Argentina reduced its imports and increased its exports. Financial services, real estate, hotels, and restaurants also saw activity shrink.

Argentina slipped into a technical recession - two straight periods of quarter-on-quarter GDP contraction - in the first quarter of this year. It closed in 2023 with a 1.6 per cent contraction.

The libertarian President Javier Milei, who took office in December, has pursued hard austerity measures that have pounded economic activity and forced poverty and unemployment up.

The government says the cost-cutting measures are required to restrain the world's highest inflation, which is hovering above 250 per cent, rebuild its foreign reserves, and reverse years of deep fiscal deficits.

While monthly inflation has hovered around the same level since May, Milei's government on Sunday published a 2025 draft budget, putting inflation at just above 18 per cent next year, GDP at 5 per cent next year, and a further 5 per cent in 2026.

Argentine markets cheered Milei's plan for a "zero" deficit budget, but they fell slightly on Wednesday following the US Federal Reserve's announcement it would cut interest rates by 50 basis points.

Argentina's economy contracted 1.7 per cent in the second quarter compared with the preceding three months, according to the country's statistics agency, which said that sent the embattled South American nation deeper into recession.

Argentina's economy contracted 1.7 per cent in the second quarter compared with the preceding three months, according to the country's statistics agency, which said that sent the embattled South American nation deeper into recession. Argentina's gross domestic product fell 1.7 per cent year-over-year, worse than analyst forecasts of a 1.4 per cent contraction compared with the year-earlier period. This is the fifth successive annualised quarterly contraction and the third successive quarter-on-quarter for the South American economy. Argentina's major agricultural sector led the growth, rising 81.2 per cent from a year earlier, and fishing was up 41.3 per cent. Still, construction dropped 22.2 per cent, manufacturing fell 17.4 per cent and retail activity slipped 15.7 per cent, INDEC said. The slumps in consumption and private investment continued, INDEC said, even though Argentina reduced its imports and increased its exports. Financial services, real estate, hotels, and restaurants also saw activity shrink. Argentina slipped into a technical recession - two straight periods of quarter-on-quarter GDP contraction - in the first quarter of this year. It closed in 2023 with a 1.6 per cent contraction. The libertarian President Javier Milei, who took office in December, has pursued hard austerity measures that have pounded economic activity and forced poverty and unemployment up. The government says the cost-cutting measures are required to restrain the world's highest inflation, which is hovering above 250 per cent, rebuild its foreign reserves, and reverse years of deep fiscal deficits. While monthly inflation has hovered around the same level since May, Milei's government on Sunday published a 2025 draft budget, putting inflation at just above 18 per cent next year, GDP at 5 per cent next year, and a further 5 per cent in 2026. Argentine markets cheered Milei's plan for a "zero" deficit budget, but they fell slightly on Wednesday following the US Federal Reserve's announcement it would cut interest rates by 50 basis points.

Argentina's recession worsens as economy contracts beyond expected

Argentina has officially entered a technical recession in the first quarter of the year.

Official data released on Monday points out the economic challenges faced during President Javier Milei's administration.

The country's gross domestic product (GDP) shrank by 2.6 per cent in the first quarter compared to the final quarter of 2023. This marks the second consecutive quarter of contraction, meeting the usual definition of a recession.

President Milei, who assumed office in December after a surprising election victory, has put in place strict austerity measures to bring back fiscal stability.

His campaign was notable for its striking imagery, such as the use of a chainsaw to symbolise his dedication to reducing government spending and achieving a balanced budget.

The most recent data from the INDEC statistics agency has shown a significant increase in the unemployment rate, which has risen to 7.7 per cent in the first quarter from 5.7 per cent at the end of last year.

This means that around 300,000 more people are unemployed compared to the previous quarter.

Additionally, there has been a sharp increase in inflation and a recession, which have greatly affected consumers and led to decreased sales in important sectors such as beef.

Moreover, budget cuts have caused a halt in state infrastructure projects by Milei, resulting in significant job losses in the construction industry.

As an economist and former pundit, Milei has argued that strict fiscal measures are essential for stabilising Argentina's finances after years of deficits and frequent sovereign debt defaults. He believes these measures will eventually rebuild the country's reputation with global investors.

Despite the immediate economic pain, Milei's focus on achieving a fiscal surplus has had a positive effect on the financial markets, with bonds and equities rallying significantly.

The broader economy has suffered, with rising poverty and homelessness becoming more prevalent. Milei remains confident that the tough fiscal approach will eventually lead to economic recovery.

The data for the first quarter showed a year-over-year economic decline of 5.1 per cent, which was slightly better than analysts' expectations of a 5.25 per cent contraction.

Private consumption decreased by 6.7 per cent yearly, while public consumption also dropped by 5 per cent during the same period.

Imports experienced a significant decline of 20.1 per cent, whereas exports showed a notable increase of 26.1 per cent.

(With inputs from Reuters)

Argentina has officially entered a technical recession in the first quarter of the year. Official data released on Monday points out the economic challenges faced during President Javier Milei's administration.

Argentina has officially entered a technical recession in the first quarter of the year. Official data released on Monday points out the economic challenges faced during President Javier Milei's administration. The country's gross domestic product (GDP) shrank by 2.6 per cent in the first quarter compared to the final quarter of 2023. This marks the second consecutive quarter of contraction, meeting the usual definition of a recession. President Milei, who assumed office in December after a surprising election victory, has put in place strict austerity measures to bring back fiscal stability. His campaign was notable for its striking imagery, such as the use of a chainsaw to symbolise his dedication to reducing government spending and achieving a balanced budget. The most recent data from the INDEC statistics agency has shown a significant increase in the unemployment rate, which has risen to 7.7 per cent in the first quarter from 5.7 per cent at the end of last year. This means that around 300,000 more people are unemployed compared to the previous quarter. Additionally, there has been a sharp increase in inflation and a recession, which have greatly affected consumers and led to decreased sales in important sectors such as beef. Moreover, budget cuts have caused a halt in state infrastructure projects by Milei, resulting in significant job losses in the construction industry. As an economist and former pundit, Milei has argued that strict fiscal measures are essential for stabilising Argentina's finances after years of deficits and frequent sovereign debt defaults. He believes these measures will eventually rebuild the country's reputation with global investors. Despite the immediate economic pain, Milei's focus on achieving a fiscal surplus has had a positive effect on the financial markets, with bonds and equities rallying significantly. The broader economy has suffered, with rising poverty and homelessness becoming more prevalent. Milei remains confident that the tough fiscal approach will eventually lead to economic recovery. The data for the first quarter showed a year-over-year economic decline of 5.1 per cent, which was slightly better than analysts' expectations of a 5.25 per cent contraction. Private consumption decreased by 6.7 per cent yearly, while public consumption also dropped by 5 per cent during the same period. Imports experienced a significant decline of 20.1 per cent, whereas exports showed a notable increase of 26.1 per cent. (With inputs from Reuters)

Argentina enters technical recession amid austerity measures

Argentina's economic activity fell by 8.4 per cent in March compared to the previous year, according to the country's official statistics agency, INDEC. This is the sixth consecutive monthly loss and the biggest reduction since 2020.

According to a Reuters poll, the March dip surpassed market estimates of a 6.9 per cent drop. The sharper-than-expected contraction demonstrates the major impact of libertarian President Javier Milei's strict cost-cutting policies since his administration began in December. Milei has implemented a stringent austerity program aimed at reducing skyrocketing poverty and lowering an annual inflation rate approaching 300 per cent.

According to INDEC data, nine industries had year-on-year reductions, with construction falling 29.9 per cent and the manufacturing industry losing 19.6 per cent. These sectors were the most severely damaged, contributing significantly to the overall drop in economic activity.

Economic activity numbers are regarded as an early indicator of future GDP developments. The March reduction comes after year-on-year drops of 3.0 per cent in February and 4.1 per cent in January, indicating a continuing downward trend.

Argentina's economic activity fell by 5.3 per cent overall in the fiscal year ended March. The protracted economic downturn highlights the difficulty that President Milei's administration faces as it attempts to stabilise the nation's economy under tough fiscal reforms.

(With inputs from Reuters)

Argentina's economic activity fell by 8.4 per cent in March compared to the previous year, according to the country's official statistics agency, INDEC. This is the sixth consecutive monthly loss and the biggest reduction since 2020.

Argentina's economic activity fell by 8.4 per cent in March compared to the previous year, according to the country's official statistics agency, INDEC. This is the sixth consecutive monthly loss and the biggest reduction since 2020. According to a Reuters poll, the March dip surpassed market estimates of a 6.9 per cent drop. The sharper-than-expected contraction demonstrates the major impact of libertarian President Javier Milei's strict cost-cutting policies since his administration began in December. Milei has implemented a stringent austerity program aimed at reducing skyrocketing poverty and lowering an annual inflation rate approaching 300 per cent. According to INDEC data, nine industries had year-on-year reductions, with construction falling 29.9 per cent and the manufacturing industry losing 19.6 per cent. These sectors were the most severely damaged, contributing significantly to the overall drop in economic activity. Economic activity numbers are regarded as an early indicator of future GDP developments. The March reduction comes after year-on-year drops of 3.0 per cent in February and 4.1 per cent in January, indicating a continuing downward trend. Argentina's economic activity fell by 5.3 per cent overall in the fiscal year ended March. The protracted economic downturn highlights the difficulty that President Milei's administration faces as it attempts to stabilise the nation's economy under tough fiscal reforms. (With inputs from Reuters)

Argentina’s economic activity plummets 8.4 per cent in March, the steepest drop since 2020

Argentina's Senate dealt a significant blow to President Javier Milei's ambitious economic agenda by rejecting his extensive "mega decree" of reforms, signalling a setback for his efforts to address the country's economic challenges. <o:p></o:p>

Despite Milei's minority presence in Congress, his decree, encompassing over 600 articles and spanning from privatisations to labour reforms, failed to secure approval in the Senate, with a vote count of 42 against to 25 in favour, along with four abstentions. <o:p></o:p>

The fate of the decree now hinges on the decision of Argentina's lower house, where Milei's party also holds a minority.<o:p></o:p>

Milei's shock treatment approach, initiated shortly after assuming office in December, sought to tackle Argentina's entrenched economic issues head-on, including a drastic devaluation of the local peso by over 50 per cent. <o:p></o:p>

While these measures aimed to address fiscal and trade imbalances, they also aggravated the hardships faced by the population. <o:p></o:p>

Notably, the country witnessed an annual inflation rate of 276 per cent last month, coupled with poverty levels soaring to 57 per cent of the population, underscoring the profound socio-economic impact of Milei's policies.<o:p></o:p>

Thursday's legislative defeat marks the second setback for Milei, following the previous month's rejection of a broader reform package. <o:p></o:p>

Despite attempts to garner support through a trimmed-down version of the decree, which excludes the privatisation of YPF SA and introduces alterations to emergency powers and pension calculations, Milei's revised approach faces mounting opposition. <o:p></o:p>

According to Bloomberg, the Senate's decision reflects a growing apprehension among lawmakers and investors regarding Milei's legislative strategy amid escalating economic turmoil.<o:p></o:p>

Opposition lawmakers, particularly from the Peronist party, exerted pressure on Vice President Victoria Villarruel to expedite the vote on the decree since January, culminating in its rejection in the Senate. <o:p></o:p>

Despite the government's condemnation of the rushed proceedings, citing concerns over unilateral decisions by certain political groups, the momentum against Milei's decree proved challenging. <o:p></o:p>

With Milei's party holding a minority presence in both legislative chambers, the path forward for his economic reforms remains uncertain.<o:p></o:p>

The unravelling of Milei's economic decree indicates the complexities of implementing radical reforms in Argentina's volatile political and economic landscape. <o:p></o:p>

While Milei's unorthodox approach garnered attention for its audacity, the resistance from lawmakers and uncertainties surrounding its efficacy have heightened anxieties among investors and citizens alike. <o:p></o:p>

(With inputs from Reuters and Bloomberg)<o:p></o:p>

Argentina's Senate dealt a significant blow to President Javier Milei's ambitious economic agenda by rejecting his extensive "mega decree" of reforms, signalling a setback for his efforts to address the country's economic challenges.

Argentina's Senate dealt a significant blow to President Javier Milei's ambitious economic agenda by rejecting his extensive "mega decree" of reforms, signalling a setback for his efforts to address the country's economic challenges. Despite Milei's minority presence in Congress, his decree, encompassing over 600 articles and spanning from privatisations to labour reforms, failed to secure approval in the Senate, with a vote count of 42 against to 25 in favour, along with four abstentions. The fate of the decree now hinges on the decision of Argentina's lower house, where Milei's party also holds a minority. Milei's shock treatment approach, initiated shortly after assuming office in December, sought to tackle Argentina's entrenched economic issues head-on, including a drastic devaluation of the local peso by over 50 per cent. While these measures aimed to address fiscal and trade imbalances, they also aggravated the hardships faced by the population. Notably, the country witnessed an annual inflation rate of 276 per cent last month, coupled with poverty levels soaring to 57 per cent of the population, underscoring the profound socio-economic impact of Milei's policies. Thursday's legislative defeat marks the second setback for Milei, following the previous month's rejection of a broader reform package. Despite attempts to garner support through a trimmed-down version of the decree, which excludes the privatisation of YPF SA and introduces alterations to emergency powers and pension calculations, Milei's revised approach faces mounting opposition. According to Bloomberg, the Senate's decision reflects a growing apprehension among lawmakers and investors regarding Milei's legislative strategy amid escalating economic turmoil. Opposition lawmakers, particularly from the Peronist party, exerted pressure on Vice President Victoria Villarruel to expedite the vote on the decree since January, culminating in its rejection in the Senate. Despite the government's condemnation of the rushed proceedings, citing concerns over unilateral decisions by certain political groups, the momentum against Milei's decree proved challenging. With Milei's party holding a minority presence in both legislative chambers, the path forward for his economic reforms remains uncertain. The unravelling of Milei's economic decree indicates the complexities of implementing radical reforms in Argentina's volatile political and economic landscape. While Milei's unorthodox approach garnered attention for its audacity, the resistance from lawmakers and uncertainties surrounding its efficacy have heightened anxieties among investors and citizens alike. (With inputs from Reuters and Bloomberg)

Argentina Senate deals blow to Milei's economic decree. Here’s what happened

A recent study conducted by the Catholic University of Argentina (UCA) has revealed alarming statistics, indicating that poverty levels in Argentina have surged to 57.4 per cent, marking the highest recorded figure in at least two decades. <o:p></o:p>

The report, cited by local media outlets, underscores the economic challenges faced by the South American nation, exacerbated by currency devaluation and subsequent price hikes.<o:p></o:p>

"The true inheritance of the caste model: Six out of every 10 Argentines are poor," remarked President Javier Milei, a libertarian figure, expressing dismay over the grim reality highlighted in the report. <o:p></o:p>

Milei's comments reflect growing discontent among Argentinians grappling with economic hardships and disillusionment with traditional political structures.<o:p></o:p>

President Milei, who assumed office with promises of radical economic reforms, initiated sweeping changes aimed at stabilising the economy, curbing hyperinflation, and addressing fiscal deficits.<o:p></o:p>

However, the implementation of policies including a 54 per cent peso devaluation against the US dollar and cuts to energy and transportation subsidies triggered a sharp increase in prices, significantly impacting the purchasing power of Argentinians.<o:p></o:p>

In response to the economic turmoil, Milei's administration unveiled measures to achieve fiscal balance, including tax hikes and the elimination of benefits for political elites, whom he refers to as "the caste."<o:p></o:p>

These initiatives, while intended to address long-standing economic imbalances, have contributed to widespread social unrest and heightened financial distress among vulnerable segments of the population.<o:p></o:p>

Argentina's economy ministry has disclosed its most recent economic data, which shows a 518.41 billion peso ($620.85 million) budget surplus for January—the first positive amount since August 2012.

While this development signals a potential turnaround, it is juxtaposed against the backdrop of surging poverty levels, highlighting the complexity of Argentina's economic landscape and the challenges facing policymakers in fostering inclusive growth.<o:p></o:p>

Despite the efforts of President Milei's government to stabilise the economy, concerns persist regarding the long-term impact of austerity measures on vulnerable communities and the broader socio-economic picture of Argentine society. <o:p></o:p>

(With inputs from Reuters)<o:p></o:p>

A recent study conducted by the Catholic University of Argentina (UCA) has revealed alarming statistics, indicating that poverty levels in Argentina have surged to 57.

A recent study conducted by the Catholic University of Argentina (UCA) has revealed alarming statistics, indicating that poverty levels in Argentina have surged to 57.4 per cent, marking the highest recorded figure in at least two decades. The report, cited by local media outlets, underscores the economic challenges faced by the South American nation, exacerbated by currency devaluation and subsequent price hikes. "The true inheritance of the caste model: Six out of every 10 Argentines are poor," remarked President Javier Milei, a libertarian figure, expressing dismay over the grim reality highlighted in the report. Milei's comments reflect growing discontent among Argentinians grappling with economic hardships and disillusionment with traditional political structures. President Milei, who assumed office with promises of radical economic reforms, initiated sweeping changes aimed at stabilising the economy, curbing hyperinflation, and addressing fiscal deficits. However, the implementation of policies including a 54 per cent peso devaluation against the US dollar and cuts to energy and transportation subsidies triggered a sharp increase in prices, significantly impacting the purchasing power of Argentinians. In response to the economic turmoil, Milei's administration unveiled measures to achieve fiscal balance, including tax hikes and the elimination of benefits for political elites, whom he refers to as "the caste." These initiatives, while intended to address long-standing economic imbalances, have contributed to widespread social unrest and heightened financial distress among vulnerable segments of the population. Argentina's economy ministry has disclosed its most recent economic data, which shows a 518.41 billion peso ($620.85 million) budget surplus for January—the first positive amount since August 2012. While this development signals a potential turnaround, it is juxtaposed against the backdrop of surging poverty levels, highlighting the complexity of Argentina's economic landscape and the challenges facing policymakers in fostering inclusive growth. Despite the efforts of President Milei's government to stabilise the economy, concerns persist regarding the long-term impact of austerity measures on vulnerable communities and the broader socio-economic picture of Argentine society. (With inputs from Reuters)

Argentina's poverty reaches 20-year peak during economic crisis, UCA study says

Argentina witnessed a major upheaval on Wednesday as the country's largest union initiated a 12-hour strike, accompanied by tens of thousands of workers protesting in Buenos Aires against the tough economic austerity measures and reforms implemented by President Javier Milei.<o:p></o:p>

This is based on a Reuters report.<o:p></o:p>

The General Confederation of Labour (CGT), a powerful umbrella union, led the strike, affecting various sectors, including transport, banks, and public services. This represents the most significant opposition to Milei's economic agenda since he assumed office, promising to address an economy grappling with 211 per cent inflation and substantial debt.<o:p></o:p>

CGT's coordinated strike and protest were fuelled by discontent over Milei's ambitious reform plans, which include spending cuts and privatisation efforts. The demonstration took aim at two key initiatives by Milei: an "omnibus" bill currently in Congress and a "mega-decree" aimed at deregulating the economy. <o:p></o:p>

Pablo Moyano, leader of the influential truckers union, voiced the sentiment at the main union event in Buenos Aires, stating, "The first cut this government is making is to the workers. Their labour reform aims to take away workers' rights."<o:p></o:p>

The strike, which commenced at noon local time, had a significant impact on essential services, with disruptions reported in transport, banks, hospitals, and public services. Local airlines were compelled to cancel hundreds of flights, reflecting the widespread influence of the labour action. <o:p></o:p>

Despite the challenges posed by the strike, Milei's government remains resolute in adhering to its reform plans. The CGT had previously used legal means to temporarily suspend certain labour-related measures in Milei's decree.<o:p></o:p>

The focal points of discontent, the "omnibus" bill and the "mega-decree," are integral parts of Milei's strategy to stabilize Argentina's economy, grappling with triple-digit inflation and a substantial fiscal deficit. <o:p></o:p>

The omnibus bill, recently approved by a committee in the lower chamber of deputies, faces opposition from the powerful Peronist bloc. Milei, an economist and former TV pundit, secured a surprising election victory last year, promising a delicate balancing act to rescue Argentina's economy while addressing deep-seated issues of poverty and debt.<o:p></o:p>

Milei's government argues that the austerity measures are indispensable after years of excessive spending, resulting in substantial debts to both local and international creditors. A precarious $44 billion deal with the International Monetary Fund further underscores the economic challenges facing Argentina. In response to the strike, Milei's security minister, Patricia Bullrich, and former presidential election rival expressed determination, stating, "There is no strike that stops us, there is no threat that intimidates us."<o:p></o:p>

(With inputs from Reuters)<o:p></o:p>

Argentina witnessed a major upheaval on Wednesday as the country's largest union initiated a 12-hour strike, accompanied by tens of thousands of workers protesting in Buenos Aires against the tough economic austerity measures and reforms implemented by President Javier Milei.

Argentina witnessed a major upheaval on Wednesday as the country's largest union initiated a 12-hour strike, accompanied by tens of thousands of workers protesting in Buenos Aires against the tough economic austerity measures and reforms implemented by President Javier Milei. This is based on a Reuters report. The General Confederation of Labour (CGT), a powerful umbrella union, led the strike, affecting various sectors, including transport, banks, and public services. This represents the most significant opposition to Milei's economic agenda since he assumed office, promising to address an economy grappling with 211 per cent inflation and substantial debt. CGT's coordinated strike and protest were fuelled by discontent over Milei's ambitious reform plans, which include spending cuts and privatisation efforts. The demonstration took aim at two key initiatives by Milei: an "omnibus" bill currently in Congress and a "mega-decree" aimed at deregulating the economy. Pablo Moyano, leader of the influential truckers union, voiced the sentiment at the main union event in Buenos Aires, stating, "The first cut this government is making is to the workers. Their labour reform aims to take away workers' rights." The strike, which commenced at noon local time, had a significant impact on essential services, with disruptions reported in transport, banks, hospitals, and public services. Local airlines were compelled to cancel hundreds of flights, reflecting the widespread influence of the labour action. Despite the challenges posed by the strike, Milei's government remains resolute in adhering to its reform plans. The CGT had previously used legal means to temporarily suspend certain labour-related measures in Milei's decree. The focal points of discontent, the "omnibus" bill and the "mega-decree," are integral parts of Milei's strategy to stabilize Argentina's economy, grappling with triple-digit inflation and a substantial fiscal deficit. The omnibus bill, recently approved by a committee in the lower chamber of deputies, faces opposition from the powerful Peronist bloc. Milei, an economist and former TV pundit, secured a surprising election victory last year, promising a delicate balancing act to rescue Argentina's economy while addressing deep-seated issues of poverty and debt. Milei's government argues that the austerity measures are indispensable after years of excessive spending, resulting in substantial debts to both local and international creditors. A precarious $44 billion deal with the International Monetary Fund further underscores the economic challenges facing Argentina. In response to the strike, Milei's security minister, Patricia Bullrich, and former presidential election rival expressed determination, stating, "There is no strike that stops us, there is no threat that intimidates us." (With inputs from Reuters)

Argentina's largest union launches massive strike against Milei's Economic reforms

In the next set of plans to bring Argentina out of the current economic crisis, the country's central bank changed its key monetary policy tool.

Argentina swaps key monetary policy tool

Argentine president Alberto Fernandez will face a litmus test today as the country is set for a mid-term poll. The results could see the center-left party lose its majority status.

Argentina: Rift brewing between moderate Peronists and Hardliners

Argentina’s economy has contracted a record 19.1% in the second quarter versus the same period a year earlier as the coronavirus pandemic crippled production and demand.

Argentina economic woes: Record 19.1% GDP contraction

Argentines reeling from an ongoing economic crisis and a shock election result that wiped out around 25% of the peso's value took to the streets of Buenos Aires on Thursday (August 15) for a demonstration that included a mobile soup kitchen for participants.

"It's getting worse all the time"- Argentines protest even as political talks offer glimmer of hope

Argentine President Mauricio Macri vowed on Monday (August 12) to win a second term despite a surprisingly strong performance by the opposition in the primary election that set off a shockwave through markets, crashing the peso currency and sending stocks and bonds tumbling.

Macri's vows to win second term after Argentine peso crashes on primary results

The ultra-tight monetary policy that Argentine authorities adopted amid last year's currency crisis has yielded results and given a big boost to the peso, although economists see potential trouble on the horizon ahead of the October 2019 general election.

After months of turmoil in which the peso lost half of its value and fear spread that further depreciation could lead to a debt default, the peso has strengthened relative to the dollar to the point that it is no longer trading within the band established under a $57 billion bailout package with the International Monetary Fund.

In a bid to weaken the peso and keep it within the trading range, Argentina's Central Bank (BCRA) started buying dollars last month on the foreign exchange market.

Economist Victor Beker told EFE that sky-high interest rates of more than 50 per cent have increased investors' appetite for Argentine bonds, which now offer a "fabulous return."

"I don't think there's any economic activity, except for drug trafficking, that can compete with that yield," said Beker, director of the Center for New Economy Studies at Argentina's Universidad de Belgrano.

He added that the philosophy now in Argentina is "take advantage while it lasts."

The peso closed at 37.4283 to the dollar on Wednesday, a level below the non-intervention trading band established in negotiations with the IMF. The moving band ranged on Wednesday between 38.021 and 49.203.

Last August, a new round of capital flight forced Argentine President Mauricio Macri to ask the IMF for an early release of funds from the standby financing deal to calm markets.

As part of the effort to shore up the peso and rein in price increases, the BCRA rolled out an IMF-backed program last September to freeze money supply growth, keep interest rates at a minimum of 60 percent (that floor on its benchmark interest rate has since been removed) and put in place a "floating band" for the peso.

Although those measures served to strengthen Argentina's currency, Beker cautioned that no economy in the world can function with interest rates at such a sky-high level because they strangle the real economy.

He also noted that rates are at astronomical levels at a time when the country is in recession.

While economists believe that the currency market will remain stable in the first half of the year thanks to an influx of dollars into the financial market and hard-currency earnings from exports of products such as soy and wheat, they say the situation is tenuous because of presidential and legislative elections scheduled for October.

Beker said the supply of dollars should not be in doubt in the first part of the year but that "then comes a second half that will be complicated because the bulk of (Argentina's) exports are carried out in the first half, and then in the second we're going to be immersed in the electoral process."

Economists consulted by EFE are forecasting that the run-up to the elections, with the foreseeable calls by candidates to renegotiate the country's debt, will increase uncertainty and prompt holders of Argentine pesos to purchase dollar-denominated foreign assets.

The ultra-tight monetary policy that Argentine authorities adopted amid last year's currency crisis has yielded results and given a big boost to the peso, although economists see potential trouble on the horizon ahead of the October 2019 general election.

The ultra-tight monetary policy that Argentine authorities adopted amid last year's currency crisis has yielded results and given a big boost to the peso, although economists see potential trouble on the horizon ahead of the October 2019 general election. After months of turmoil in which the peso lost half of its value and fear spread that further depreciation could lead to a debt default, the peso has strengthened relative to the dollar to the point that it is no longer trading within the band established under a $57 billion bailout package with the International Monetary Fund. In a bid to weaken the peso and keep it within the trading range, Argentina's Central Bank (BCRA) started buying dollars last month on the foreign exchange market. Economist Victor Beker told EFE that sky-high interest rates of more than 50 per cent have increased investors' appetite for Argentine bonds, which now offer a "fabulous return." "I don't think there's any economic activity, except for drug trafficking, that can compete with that yield," said Beker, director of the Center for New Economy Studies at Argentina's Universidad de Belgrano. He added that the philosophy now in Argentina is "take advantage while it lasts." The peso closed at 37.4283 to the dollar on Wednesday, a level below the non-intervention trading band established in negotiations with the IMF. The moving band ranged on Wednesday between 38.021 and 49.203. Last August, a new round of capital flight forced Argentine President Mauricio Macri to ask the IMF for an early release of funds from the standby financing deal to calm markets. As part of the effort to shore up the peso and rein in price increases, the BCRA rolled out an IMF-backed program last September to freeze money supply growth, keep interest rates at a minimum of 60 percent (that floor on its benchmark interest rate has since been removed) and put in place a "floating band" for the peso. Although those measures served to strengthen Argentina's currency, Beker cautioned that no economy in the world can function with interest rates at such a sky-high level because they strangle the real economy. He also noted that rates are at astronomical levels at a time when the country is in recession. While economists believe that the currency market will remain stable in the first half of the year thanks to an influx of dollars into the financial market and hard-currency earnings from exports of products such as soy and wheat, they say the situation is tenuous because of presidential and legislative elections scheduled for October. Beker said the supply of dollars should not be in doubt in the first part of the year but that "then comes a second half that will be complicated because the bulk of (Argentina's) exports are carried out in the first half, and then in the second we're going to be immersed in the electoral process." Economists consulted by EFE are forecasting that the run-up to the elections, with the foreseeable calls by candidates to renegotiate the country's debt, will increase uncertainty and prompt holders of Argentine pesos to purchase dollar-denominated foreign assets.

Argentina's currency gets boost from tight monetary policy

Argentine government worker Fabián Pennella lost his job on August 17, just as his country plunged deeper into economic crisis. On the same day, President Mauricio Macri acknowledged in a news conference that more Argentines were living in poverty.

In Argentina, 2018 has become the year of the "new poor."

Interest rates are at world highs, inflation is close to 50 per cent and the peso has lost nearly 50 per cent of its value against the dollar. Consumers have also faced wallet-emptying double-digit increases to electricity and gas bills and public transport fares, part of Macri's austerity program to balance the budget.

A drought crippling vital agricultural production, investor worries about Macri's ability to plug yawning fiscal and trade deficits, and higher US&nbsp;interest rates that sucked money from emerging markets combined to deliver a series of blows to Latin America's third-biggest economy in 2018.

In Buenos Aires, shops with final sale signs or steel security shutters drawn down are a common sight. Some Argentines have resorted to barter clubs to exchange food and clothes. Anecdotally, there is evidence more people are participating in the gig economy, renting out rooms on Airbnb or driving for Uber for extra income.

Pennella, 36, is one of those seeking a job with Uber.

Four months ago, he was an executive assistant at a state energy company where he had worked for ten years. He rented a suburban house, had a health plan for his family, and took regular holidays.

When he lost his job, his wife lost her income, too. She had sold home-made food at his office. No longer able to afford rent, Pennella, his wife and two young children have moved into an apartment on the ground floor of his parent's house.

The family's only income comes from odd jobs, like painting, that Pennella finds while he waits for Uber to approve his application.

Macri, a wealthy former mayor of Buenos Aires, won the presidential election in 2015 on his "Let's change" platform, an attractive message for voters exhausted by the corruption scandals and the country's frequent economic and political crises.

On taking office, Macri made good on his promises to eliminate capital controls, cut export taxes and float the peso, moves that pleased foreign investors. He also pledged to bring inflation down to single digits.

That hasn't happened. Economists now forecast the country will end 2018 with inflation touching 50 per cent.

One of the first storms to strike the economy with tornado-like force occurred in April, when yields on the US&nbsp;benchmark 10-year Treasury notes reached their highest in four years, battering emerging markets. Argentina was one of those, hit the hardest.

Over a period of three days, Argentina's central bank sold more than $2 billion in foreign reserves in a vain effort to stop a sharp devaluation of the peso.

As the peso continued to fall, the central bank increased interest rates in May to 40 per cent and Macri began emergency talks with the International Monetary Fund. In June, the IMF announced a $50 billion lifeline for Argentina.

Throughout the crisis, Macri has been highly visible on television, explaining to Argentines the steps his government is taking. Nevertheless, his approval ratings have tumbled.

Emiliano Di Ilio, a 38-year-old pharmacy owner, voted for Macri in the hope he could bring economic stability.

Macri has acknowledged that his austerity program is painful but also necessary to develop the economy.

Even as Argentines struggled to adjust to their new reality in the early months of 2018, another storm was brewing.

A devaluation in the Turkish lira on Aug. 10 reignited concerns over the vulnerability of emerging markets. The peso was in the line of fire. Within three days it had crashed to an all-time low against the dollar.

It was a fresh blow for Argentines already battling to make ends meet amid rampant inflation, fueled in part by subsidy cuts that led to a 70 per cent increase in gas prices, a 24 per cent hike in electricity bills and a 116 per cent jump in public transport fares over the year.

While the economic crisis is not on the same scale as the 2001-2002 meltdown, its impact is clearly visible along Florida Street, one of the capital's main shopping arteries. Some 20 per cent of its nearly 1,300 stores are unoccupied, according to a December report by the real estate firm Adrián Mercado.

The weak sales come against a background of rising unemployment, which climbed to 9 per cent in the third quarter, up from 8.3 per cent in the same period in 2017, according to official data.

Government data is expected to show poverty grew to 33 per cent by the end of the year from 27 per cent in the first half of 2018, said researcher Agustín Salvia at the Catholic University of Argentina. (A person earning less than $213 per month is considered to be living in poverty in Argentina.)

Argentina recently changed the way it measures poverty, so it is difficult to show a historical comparison. The 33 per cent figure would be the highest since 2016 and some researchers think it would be the highest in at least a decade.

Macri went on national television on Sept. 3 to announce emergency measures to halt a collapse in the peso and restore investor confidence.

The central bank had already raised interest rates to 60 per cent. Now Macri's government announced a tax on exports, a halving of government ministries and other measures to cut spending. The following month Argentina secured $7 billion in additional funding from the IMF.

Those measures, along with a tighter monetary policy and an austere budget passed by Congress in October, have helped stabilise the peso. Economists expect the recession to bottom out in the first quarter of 2019. 
&nbsp;

In Argentina, 2018 has become the year of the 'new poor.'

Argentine government worker Fabián Pennella lost his job on August 17, just as his country plunged deeper into economic crisis. On the same day, President Mauricio Macri acknowledged in a news conference that more Argentines were living in poverty. In Argentina, 2018 has become the year of the "new poor." Interest rates are at world highs, inflation is close to 50 per cent and the peso has lost nearly 50 per cent of its value against the dollar. Consumers have also faced wallet-emptying double-digit increases to electricity and gas bills and public transport fares, part of Macri's austerity program to balance the budget. A drought crippling vital agricultural production, investor worries about Macri's ability to plug yawning fiscal and trade deficits, and higher US interest rates that sucked money from emerging markets combined to deliver a series of blows to Latin America's third-biggest economy in 2018. In Buenos Aires, shops with final sale signs or steel security shutters drawn down are a common sight. Some Argentines have resorted to barter clubs to exchange food and clothes. Anecdotally, there is evidence more people are participating in the gig economy, renting out rooms on Airbnb or driving for Uber for extra income. Pennella, 36, is one of those seeking a job with Uber. Four months ago, he was an executive assistant at a state energy company where he had worked for ten years. He rented a suburban house, had a health plan for his family, and took regular holidays. When he lost his job, his wife lost her income, too. She had sold home-made food at his office. No longer able to afford rent, Pennella, his wife and two young children have moved into an apartment on the ground floor of his parent's house. The family's only income comes from odd jobs, like painting, that Pennella finds while he waits for Uber to approve his application. Macri, a wealthy former mayor of Buenos Aires, won the presidential election in 2015 on his "Let's change" platform, an attractive message for voters exhausted by the corruption scandals and the country's frequent economic and political crises. On taking office, Macri made good on his promises to eliminate capital controls, cut export taxes and float the peso, moves that pleased foreign investors. He also pledged to bring inflation down to single digits. That hasn't happened. Economists now forecast the country will end 2018 with inflation touching 50 per cent. One of the first storms to strike the economy with tornado-like force occurred in April, when yields on the US benchmark 10-year Treasury notes reached their highest in four years, battering emerging markets. Argentina was one of those, hit the hardest. Over a period of three days, Argentina's central bank sold more than $2 billion in foreign reserves in a vain effort to stop a sharp devaluation of the peso. As the peso continued to fall, the central bank increased interest rates in May to 40 per cent and Macri began emergency talks with the International Monetary Fund. In June, the IMF announced a $50 billion lifeline for Argentina. Throughout the crisis, Macri has been highly visible on television, explaining to Argentines the steps his government is taking. Nevertheless, his approval ratings have tumbled. Emiliano Di Ilio, a 38-year-old pharmacy owner, voted for Macri in the hope he could bring economic stability. Macri has acknowledged that his austerity program is painful but also necessary to develop the economy. Even as Argentines struggled to adjust to their new reality in the early months of 2018, another storm was brewing. A devaluation in the Turkish lira on Aug. 10 reignited concerns over the vulnerability of emerging markets. The peso was in the line of fire. Within three days it had crashed to an all-time low against the dollar. It was a fresh blow for Argentines already battling to make ends meet amid rampant inflation, fueled in part by subsidy cuts that led to a 70 per cent increase in gas prices, a 24 per cent hike in electricity bills and a 116 per cent jump in public transport fares over the year. While the economic crisis is not on the same scale as the 2001-2002 meltdown, its impact is clearly visible along Florida Street, one of the capital's main shopping arteries. Some 20 per cent of its nearly 1,300 stores are unoccupied, according to a December report by the real estate firm Adrián Mercado. The weak sales come against a background of rising unemployment, which climbed to 9 per cent in the third quarter, up from 8.3 per cent in the same period in 2017, according to official data. Government data is expected to show poverty grew to 33 per cent by the end of the year from 27 per cent in the first half of 2018, said researcher Agustín Salvia at the Catholic University of Argentina. (A person earning less than $213 per month is considered to be living in poverty in Argentina.) Argentina recently changed the way it measures poverty, so it is difficult to show a historical comparison. The 33 per cent figure would be the highest since 2016 and some researchers think it would be the highest in at least a decade. Macri went on national television on Sept. 3 to announce emergency measures to halt a collapse in the peso and restore investor confidence. The central bank had already raised interest rates to 60 per cent. Now Macri's government announced a tax on exports, a halving of government ministries and other measures to cut spending. The following month Argentina secured $7 billion in additional funding from the IMF. Those measures, along with a tighter monetary policy and an austere budget passed by Congress in October, have helped stabilise the peso. Economists expect the recession to bottom out in the first quarter of 2019.

How a year of 'endless storms' battered Argentina's economy

As the Latin America's third-largest economy Argentina faces recession, the chief of the Central bank of the country Luis Caputo resigned from his post on Tuesday.

The resignation comes in the wake of the massive protests led by the people of the country against inflation and devaluation of the currency.

Argentina's currency peso slipped 0.13 per cent to close at 37.33 to the dollar on Monday.

The currency has lost around 50 per cent of its value against the dollar this year, amid wider jitters in emerging markets.

Thousands of people thronged the streets of Buenos Aires on Monday protesting Argentine President Mauricio Macri's policies, a day before a nationwide 24-hour strike called by unions, which have threatened to shut down all public transit in the city.

The central bank said it auctioned $112 million out of $250 million offered at an average price of 37.3172 per dollar.

Argentina's central bank has hiked interest rates to 60 per cent. Fueled by the devaluation, inflation is forecast to end the year at over 40 per cent, pushing up poverty levels in Latin America's third-largest economy.

A drought this year weakened Argentina's grain exports and threw Latin America's third-largest economy into recession.&nbsp;

Meanwhile, Argentine President Mauricio Macri said on Monday his country was close to a deal with the International Monetary Fund to bolster a $50 billion credit line, while a government source said $3-$5 billion in additional funds could be announced this week.

Argentina would receive additional support from the IMF but he declined to provide further details as talks were still in progress.

Argentina approached the IMF last month to modify the details of the $50 billion standby agreement signed in June after concerns over its ability to pay its debts - most of which are in dollars - sparked a renewed run on the peso currency.

The extra funds would cover most of Argentina's financing needs through 2019, except for $2.5 billion that would need to be raised in domestic markets next year, according to a recent report from the Treasury Ministry.

(With inputs from agencies)

As the Latin America's third-largest economy Argentina faces recession, the chief of the Central bank of the country Luis Caputo resigned from his post on Tuesday.

As the Latin America's third-largest economy Argentina faces recession, the chief of the Central bank of the country Luis Caputo resigned from his post on Tuesday. The resignation comes in the wake of the massive protests led by the people of the country against inflation and devaluation of the currency. Argentina's currency peso slipped 0.13 per cent to close at 37.33 to the dollar on Monday. The currency has lost around 50 per cent of its value against the dollar this year, amid wider jitters in emerging markets. Thousands of people thronged the streets of Buenos Aires on Monday protesting Argentine President Mauricio Macri's policies, a day before a nationwide 24-hour strike called by unions, which have threatened to shut down all public transit in the city. The central bank said it auctioned $112 million out of $250 million offered at an average price of 37.3172 per dollar. Argentina's central bank has hiked interest rates to 60 per cent. Fueled by the devaluation, inflation is forecast to end the year at over 40 per cent, pushing up poverty levels in Latin America's third-largest economy. A drought this year weakened Argentina's grain exports and threw Latin America's third-largest economy into recession. Meanwhile, Argentine President Mauricio Macri said on Monday his country was close to a deal with the International Monetary Fund to bolster a $50 billion credit line, while a government source said $3-$5 billion in additional funds could be announced this week. Argentina would receive additional support from the IMF but he declined to provide further details as talks were still in progress. Argentina approached the IMF last month to modify the details of the $50 billion standby agreement signed in June after concerns over its ability to pay its debts - most of which are in dollars - sparked a renewed run on the peso currency. The extra funds would cover most of Argentina's financing needs through 2019, except for $2.5 billion that would need to be raised in domestic markets next year, according to a recent report from the Treasury Ministry. (With inputs from agencies)

Argentina's central bank chief Luis Caputo resigns amid economic crisis