13 ms·

Argentina's economy is growing beyond expectations

76 points by cwwc 2y ago

Martin_kRussell 2y ago
[dead]
gtirloni 2y ago
I hope they make out of this recent recession but people should be cautious in using words like "the economy surged" when describing a 1.3% increase in economic activity. If anything, Argentina is known for being a economic rollercoaster fueled by populist after populist government. It never works out and the current situation seems like more of the same.
- dmix 2y ago
  Their inflation has been a rollercoaster but their GDP per capita has pretty consistently been on a downward trend for half a century. https://substackcdn.com/image/fetch/w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Faa3cb276-5b1b-44c2-8bfa-60057e48fbcd_720x448.webp https://substackcdn.com/image/fetch/w_1456,c_limit,f_webp,q_... Also calling the politics just a series of populists does not accurately represent the economic agendas which have been exactly the same thing (basically left leaning populism via a heavy administrative state) repeated ad nauseam with the exact same outcome. The whole reason Milei won was because the competition was from the same parties as always, proposing the same solutions as always, and he was the only one demanding something change, so people saw it as and opportunity and looked past the more radical stuff he was saying.
  - viraptor 2y ago
    > Also calling the politics just a series of populists does not accurately represent the economic agendas which have been exactly the same thing (basically left leaning populism via a heavy administrative state) I don't understand this paragraph. It's not a series of populists, because it's been the same populist agendas? Is there some typo?
    - zpeti 2y ago
      I think maybe OP is thinking “populist” generally is a slur for non-social democrat right wing governments these days.
    - dmix 2y ago
      I see a distinction between economics and politics messaging. If the economics agenda is exactly the same that's all that matters to this discussion. When every gov before him did the exact same pattern of going repeatedly goes into huge debt and uses gov social/economics projects to fix things, then the variations in their populists messaging is not really relevant.
- Findeton 2y ago
  I'd say you don't know what you're talking about. Milei cut back government spending by 30% from the first month on (that's a 15% gdp of spending cuts in a month), and achieved fiscal surplus/superavit on that month. Contrary to the (very wrong) keynsian economics, deficit spending doesn't promote economic growth and Milei's measures and results demonstrate that actually having a smaller government with surplus promotes economic growth.
  - skissane 2y ago
    > and achieved fiscal superavit I didn't understand what you mean by "superavit" Then I realised you are using the Spanish word superávit instead of its English equivalent "surplus"
  - kspacewalk2 2y ago
    I'd say you don't really understand Keynesian economics, also known as macroecon 101. Nowhere is it claimed that deficit spending promotes economic growth indefinitely and in all circumstances. Deficit spending (or just more spending, whether financed by deficits or not) can, and demonstrably does, temporarily dampen the effects of economic downturns. It can also promote economic growth if investments that are made will enable longer-term growth, e.g. by investing in infrastructure, education or research. Clearly none of that prescribes structural deficits ad infinitum and spending your way to hyperinflation in order to make good on idiotic populist promises, otherwise known as Argentinian macroecon 101 before Milei. The fact that it took chainsaw guy to trick Argentinians into electing someone who implements adult policies is a damning indictment of the average Argentinian voters, so I'd say leave poor John Maynard Keynes out of it, no one in Argentina was listening to him anyway, possibly ever. Also, just say surplus.
    - Findeton 2y ago
      Well, Argentina has been in recession for more than a decade. Now, he's cut 30% of the government spending and... the economy is back to growth. So, sorry for destroying your Keynesian beliefs.
      - 2y ago
- roenxi 2y ago
  And this is the sort of thing there really needs to be a big "what matters?" conversation. 1% GDP growth is not important. With growth rates like that, what matters is sustaining 1% growth over 10-20 years so that the impacts become material. I hope Argentina is doing well, maybe Argentina is doing well, but this article contains no evidence Argentina is doing well, badly or otherwise. And by all the heavens, could people please resist the urge to try and judge economic performance after a candidate has been in office for 1 quarter. Good economic management takes requires a decade or so before the fruits ripen. And mad scheme can work for 12 months and goose the figures if people care to.
- sofixa 2y ago
  > If anything, Argentina is known for being a economic rollercoaster fueled by populist after populist government. It never works out and the current situation seems like more of the same As the saying goes, there are 4 types of economies. Developed, developing, Japan (stagnation for decades with no negative ramification as normally would be expected) and Argentina (basket case).
  - AstralStorm 2y ago
    The negative ramification for Japanese economy is demographics. This kind of stagnation with no serious full employment kills remaining hopes of future generation, prevents them from owning housing and causes negative birth rates resulting in further collapse of social security plus social problems.
1oooqooq 2y ago
interesting puff piece. The real title is "metrics foreign banks look at are rising because that's the only thing being focused. metrics for actual well being down". It's all there between the lines in their source reports. I expect a huge, huge, loan soon. Then temporary reprieve for the population with some populist actions. Right around re-election.
- hsavit1 2y ago
  Yeah this piece is top tier delusional, I’m thinking it had to be written by someone with heavy crypto libertarian leanings. Argentina’s poverty rate is currently ~57%. See https://www.thedialogue.org/analysis/will-argentinas-poverty-fall-under-mileis-government/#:~:text=The%20report%20shows%20that%2057.4,had%20on%20poverty%20in%20Argentina%3F https://www.thedialogue.org/analysis/will-argentinas-poverty...
  - kspacewalk2 2y ago
    Not sure in what way high poverty levels invalidate the idea of the economy growing beyond expectations. Rwanda's economy is growing quite fast while we here in Canada are experiencing at best zero growth. That isn't really related to how our poverty levels compare.
    - AstralStorm 2y ago
      Isn't that the whole trickle down unsubstantiated bullshit used to sell all sorts of non working measures to the masses? So, the whole problem is pretty obvious: you cannot save enough to invest. Banks are not interested in savings, they're interested in extraction of cheap labor and resources - which requires owning. Investment as well is only provided under bad rates, under such speculation. And when it's not the locals owning anything, they remain poor and cannot save. Economic growth is a wrong measure of wealth: one needs to look at who grows.
    - 1oooqooq 2y ago
      you really don't see the contradiction in your own argument? well i guess you must be a Canadian desperate to move to Rwanda then...
ayakang31415 2y ago
Since the beginning of 2024, official exchange rate of Argentina peso to USD is relatively flat compared to the declining rate before Milei was elected. To me, this indicates that inflation is slowly stablizing. But I know there is also "unofficial" exchange rate people use in Argentina. Does anyone know how the unofficial exchange rate?
- graton 2y ago
  If you search for: blue dollar argentina You should find the "unofficial" rates.
- licyeus 2y ago
  I visited in May. When I left, at blue dollar rates, 1 USD = ~1040 Argentinine pesos; today, 1 USD = 1415 pesos. Ie, 35% inflation in 2.5 months. [1] And every month, the government claims unbelievably low inflation: 4.2% in May, 4.6% in June. 0 - https://bluedollar.net/informal-rate/ https://bluedollar.net/informal-rate/
  - gus_massa 2y ago
    Note that at the end of January the price was a ~1250AR$, then it strangely reduced to 1000AR$ until the middle of May. In the last 15 days it raised to ~1500AR$ and then go down to ~1450AR$. I guess it will go to $1400 next week, but who knows. https://www.dolarito.ar/cotizaciones-historicas/oficial https://www.dolarito.ar/cotizaciones-historicas/oficial
ks2048 2y ago
This is an interesting case study in how a reporter decides to word some basic facts. Here, the economy "surged by 1.3%", but in the cited source (Bloomberg), the economy "rose by 1.3%". That article also has more stats and context: https://archive.ph/zQdyP https://archive.ph/zQdyP
- Findeton 2y ago
  The fact that economic activity year over year has increased at all (after 7 months with Milei) is just astonishing. It is astonishing because Milei inherited a deficit of 15% of GDP, so he cut 30% of government spending on the first month to get to fiscal surplus that month. He inherited a broke central bank (-11.8B in reserves) and he's recovered back to -4B (still some way to go). He inherited 50B of debt with exporters (they have "cepo cambiario"/exchange control policies). So even after having to cut down so much, now the economy is starting to recover. BTW the reason Argentina just can't stand ANY deficit at all is because it creates inflation. It creates inflation because NO ONE loans them money, so the only way to have deficit is to "print money" from thin air.
deleted 2y ago
[deleted]
0xbadc0de5 2y ago
It's not that the title is hyperbolic, it's that expectations were so low that even modest growth is a headline making event. I'm going to reserve judgement for a while longer and stay cautiously optimistic. The Argentinians are good people. If the current government successfully steers them away from the last century of economic turmoil, this can only be a good thing for them and for the world.
sanbor 2y ago
Last trimester of 2023 poverty was 44.8% and first trimester of 2024 with the new government poverty is 55.5% on the rise[1]. That is 10.7% increase of poverty in 4 months, or 2,6% increase in poverty every month of the new government. I don’t completely blame the new government for the rapid increase in poverty but austerity measures such as firing people working in the public sector and reducing social assistance contributed a lot. [1] https://www.ambito.com/economia/la-pobreza-trepo-al-555-el-primer-trimestre-ya-afecta-casi-25-millones-argentinos-segun-la-uca-n6009313 https://www.ambito.com/economia/la-pobreza-trepo-al-555-el-p...

76 points by cwwc 2y ago

[dead]

I hope they make out of this recent recession but people should be cautious in using words like "the economy surged" when describing a 1.3% increase in economic activity. If anything, Argentina is known for being a economic rollercoaster fueled by populist after populist government. It never works out and the current situation seems like more of the same.

dmix 2y ago
Their inflation has been a rollercoaster but their GDP per capita has pretty consistently been on a downward trend for half a century. https://substackcdn.com/image/fetch/w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Faa3cb276-5b1b-44c2-8bfa-60057e48fbcd_720x448.webp https://substackcdn.com/image/fetch/w_1456,c_limit,f_webp,q_... Also calling the politics just a series of populists does not accurately represent the economic agendas which have been exactly the same thing (basically left leaning populism via a heavy administrative state) repeated ad nauseam with the exact same outcome. The whole reason Milei won was because the competition was from the same parties as always, proposing the same solutions as always, and he was the only one demanding something change, so people saw it as and opportunity and looked past the more radical stuff he was saying.
- viraptor 2y ago
  > Also calling the politics just a series of populists does not accurately represent the economic agendas which have been exactly the same thing (basically left leaning populism via a heavy administrative state) I don't understand this paragraph. It's not a series of populists, because it's been the same populist agendas? Is there some typo?
  - zpeti 2y ago
    I think maybe OP is thinking “populist” generally is a slur for non-social democrat right wing governments these days.
  - dmix 2y ago
    I see a distinction between economics and politics messaging. If the economics agenda is exactly the same that's all that matters to this discussion. When every gov before him did the exact same pattern of going repeatedly goes into huge debt and uses gov social/economics projects to fix things, then the variations in their populists messaging is not really relevant.
Findeton 2y ago
I'd say you don't know what you're talking about. Milei cut back government spending by 30% from the first month on (that's a 15% gdp of spending cuts in a month), and achieved fiscal surplus/superavit on that month. Contrary to the (very wrong) keynsian economics, deficit spending doesn't promote economic growth and Milei's measures and results demonstrate that actually having a smaller government with surplus promotes economic growth.
- skissane 2y ago
  > and achieved fiscal superavit I didn't understand what you mean by "superavit" Then I realised you are using the Spanish word superávit instead of its English equivalent "surplus"
- kspacewalk2 2y ago
  I'd say you don't really understand Keynesian economics, also known as macroecon 101. Nowhere is it claimed that deficit spending promotes economic growth indefinitely and in all circumstances. Deficit spending (or just more spending, whether financed by deficits or not) can, and demonstrably does, temporarily dampen the effects of economic downturns. It can also promote economic growth if investments that are made will enable longer-term growth, e.g. by investing in infrastructure, education or research. Clearly none of that prescribes structural deficits ad infinitum and spending your way to hyperinflation in order to make good on idiotic populist promises, otherwise known as Argentinian macroecon 101 before Milei. The fact that it took chainsaw guy to trick Argentinians into electing someone who implements adult policies is a damning indictment of the average Argentinian voters, so I'd say leave poor John Maynard Keynes out of it, no one in Argentina was listening to him anyway, possibly ever. Also, just say surplus.
  - Findeton 2y ago
    Well, Argentina has been in recession for more than a decade. Now, he's cut 30% of the government spending and... the economy is back to growth. So, sorry for destroying your Keynesian beliefs.
    - 2y ago
roenxi 2y ago
And this is the sort of thing there really needs to be a big "what matters?" conversation. 1% GDP growth is not important. With growth rates like that, what matters is sustaining 1% growth over 10-20 years so that the impacts become material. I hope Argentina is doing well, maybe Argentina is doing well, but this article contains no evidence Argentina is doing well, badly or otherwise. And by all the heavens, could people please resist the urge to try and judge economic performance after a candidate has been in office for 1 quarter. Good economic management takes requires a decade or so before the fruits ripen. And mad scheme can work for 12 months and goose the figures if people care to.
sofixa 2y ago
> If anything, Argentina is known for being a economic rollercoaster fueled by populist after populist government. It never works out and the current situation seems like more of the same As the saying goes, there are 4 types of economies. Developed, developing, Japan (stagnation for decades with no negative ramification as normally would be expected) and Argentina (basket case).
- AstralStorm 2y ago
  The negative ramification for Japanese economy is demographics. This kind of stagnation with no serious full employment kills remaining hopes of future generation, prevents them from owning housing and causes negative birth rates resulting in further collapse of social security plus social problems.

1oooqooq 2y ago

interesting puff piece. The real title is "metrics foreign banks look at are rising because that's the only thing being focused. metrics for actual well being down". It's all there between the lines in their source reports. I expect a huge, huge, loan soon. Then temporary reprieve for the population with some populist actions. Right around re-election.

hsavit1 2y ago
Yeah this piece is top tier delusional, I’m thinking it had to be written by someone with heavy crypto libertarian leanings. Argentina’s poverty rate is currently ~57%. See https://www.thedialogue.org/analysis/will-argentinas-poverty-fall-under-mileis-government/#:~:text=The%20report%20shows%20that%2057.4,had%20on%20poverty%20in%20Argentina%3F https://www.thedialogue.org/analysis/will-argentinas-poverty...
- kspacewalk2 2y ago
  Not sure in what way high poverty levels invalidate the idea of the economy growing beyond expectations. Rwanda's economy is growing quite fast while we here in Canada are experiencing at best zero growth. That isn't really related to how our poverty levels compare.
  - AstralStorm 2y ago
    Isn't that the whole trickle down unsubstantiated bullshit used to sell all sorts of non working measures to the masses? So, the whole problem is pretty obvious: you cannot save enough to invest. Banks are not interested in savings, they're interested in extraction of cheap labor and resources - which requires owning. Investment as well is only provided under bad rates, under such speculation. And when it's not the locals owning anything, they remain poor and cannot save. Economic growth is a wrong measure of wealth: one needs to look at who grows.
  - 1oooqooq 2y ago
    you really don't see the contradiction in your own argument? well i guess you must be a Canadian desperate to move to Rwanda then...

ayakang31415 2y ago

Since the beginning of 2024, official exchange rate of Argentina peso to USD is relatively flat compared to the declining rate before Milei was elected. To me, this indicates that inflation is slowly stablizing. But I know there is also "unofficial" exchange rate people use in Argentina. Does anyone know how the unofficial exchange rate?

graton 2y ago
If you search for: blue dollar argentina You should find the "unofficial" rates.
licyeus 2y ago
I visited in May. When I left, at blue dollar rates, 1 USD = ~1040 Argentinine pesos; today, 1 USD = 1415 pesos. Ie, 35% inflation in 2.5 months. [1] And every month, the government claims unbelievably low inflation: 4.2% in May, 4.6% in June. 0 - https://bluedollar.net/informal-rate/ https://bluedollar.net/informal-rate/
- gus_massa 2y ago
  Note that at the end of January the price was a ~1250AR$, then it strangely reduced to 1000AR$ until the middle of May. In the last 15 days it raised to ~1500AR$ and then go down to ~1450AR$. I guess it will go to $1400 next week, but who knows. https://www.dolarito.ar/cotizaciones-historicas/oficial https://www.dolarito.ar/cotizaciones-historicas/oficial

ks2048 2y ago

This is an interesting case study in how a reporter decides to word some basic facts. Here, the economy "surged by 1.3%", but in the cited source (Bloomberg), the economy "rose by 1.3%". That article also has more stats and context: https://archive.ph/zQdyP https://archive.ph/zQdyP

Findeton 2y ago
The fact that economic activity year over year has increased at all (after 7 months with Milei) is just astonishing. It is astonishing because Milei inherited a deficit of 15% of GDP, so he cut 30% of government spending on the first month to get to fiscal surplus that month. He inherited a broke central bank (-11.8B in reserves) and he's recovered back to -4B (still some way to go). He inherited 50B of debt with exporters (they have "cepo cambiario"/exchange control policies). So even after having to cut down so much, now the economy is starting to recover. BTW the reason Argentina just can't stand ANY deficit at all is because it creates inflation. It creates inflation because NO ONE loans them money, so the only way to have deficit is to "print money" from thin air.

deleted 2y ago

[deleted]

0xbadc0de5 2y ago

It's not that the title is hyperbolic, it's that expectations were so low that even modest growth is a headline making event. I'm going to reserve judgement for a while longer and stay cautiously optimistic. The Argentinians are good people. If the current government successfully steers them away from the last century of economic turmoil, this can only be a good thing for them and for the world.

sanbor 2y ago

Last trimester of 2023 poverty was 44.8% and first trimester of 2024 with the new government poverty is 55.5% on the rise[1]. That is 10.7% increase of poverty in 4 months, or 2,6% increase in poverty every month of the new government. I don’t completely blame the new government for the rapid increase in poverty but austerity measures such as firing people working in the public sector and reducing social assistance contributed a lot. [1] https://www.ambito.com/economia/la-pobreza-trepo-al-555-el-primer-trimestre-ya-afecta-casi-25-millones-argentinos-segun-la-uca-n6009313 https://www.ambito.com/economia/la-pobreza-trepo-al-555-el-p...