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18-03-2023, 02:25 PM
Can Argentina cope with inflation of over 100%?
#Econgram_LA
Facts:
1) Argentina had its ninth default in 2020.
2) Currently, inflation is over 100%. Nonetheless, the government is printing money to cover its expenditures.
Analysis:
1) Argentina is facing many issues at once: isolation from international markets due to the 2020 default, high inflation and droughts. As a result, some economists predict that Argentina will experience hyperinflation*.
2) However, Buenos Aires has promising economic prospects.
- This year, the country will start pumping gas from Vaca Muerta, the world’s second-largest shale gasfield*. Initially, the gas would be supplied to Buenos Aires. Later, it would be exported to Chile and Brazil. The former finance minister claims that Argentina could convert its $5bn energy trade deficit* to a $15bn surplus.
- JPMorgan forecasts that by 2030 Argentina will become the world’s third-largest lithium producer.
3) Regardless, some economists state that situation might not improve despite Argentina’s opportunities. Indeed, roughly 7mn Argentinians live on welfare* and have never worked. A big chunk of the population has low gas prices due to subsidies. The country’s economic prosperity requires a cut in spending, but these benefits would be difficult to remove.
#Econgram_LA
Facts:
1) Argentina had its ninth default in 2020.
2) Currently, inflation is over 100%. Nonetheless, the government is printing money to cover its expenditures.
Analysis:
1) Argentina is facing many issues at once: isolation from international markets due to the 2020 default, high inflation and droughts. As a result, some economists predict that Argentina will experience hyperinflation*.
2) However, Buenos Aires has promising economic prospects.
- This year, the country will start pumping gas from Vaca Muerta, the world’s second-largest shale gasfield*. Initially, the gas would be supplied to Buenos Aires. Later, it would be exported to Chile and Brazil. The former finance minister claims that Argentina could convert its $5bn energy trade deficit* to a $15bn surplus.
- JPMorgan forecasts that by 2030 Argentina will become the world’s third-largest lithium producer.
3) Regardless, some economists state that situation might not improve despite Argentina’s opportunities. Indeed, roughly 7mn Argentinians live on welfare* and have never worked. A big chunk of the population has low gas prices due to subsidies. The country’s economic prosperity requires a cut in spending, but these benefits would be difficult to remove.
