With the start of the year, Argentina officially entered a technical recession.
Official figures that were made public on Monday highlight the economic difficulties that President Javier Milei’s government encountered.
When comparing the first quarter of 2023 to the last quarter of 2023, the nation’s gross domestic product (GDP) decreased by 2.6{d38a898658503095d09ccca72b3373e8fa824aa4f0215737cc70c89fc7ca3936}. According to the standard definition of a recession, this is the second consecutive quarter of contraction.
After a shock electoral victory, President Milei took office in December and implemented stringent austerity measures to restore budgetary stability.
His campaign gained notoriety for its powerful imagery, such the chainsaw he used to represent his commitment to cutting government expenditure and balancing the budget.
The unemployment rate increased significantly from 5.7{d38a898658503095d09ccca72b3373e8fa824aa4f0215737cc70c89fc7ca3936} at the end of last year to 7.7{d38a898658503095d09ccca72b3373e8fa824aa4f0215737cc70c89fc7ca3936} in the first quarter, according to the most recent figures from the INDEC statistics office.
This indicates that, in comparison to the prior quarter, about 300,000 more people are unemployed.
In addition, there has been a recession and a steep rise in inflation, which have had a significant impact on consumers and reduced sales in significant industries like cattle.
Additionally, Milei’s governmental infrastructure projects have been put on hold due to budget cuts, which has significantly reduced employment in the construction sector.
Milei, a former pundit and economist, has maintained that tight fiscal policies are necessary to stabilize Argentina’s finances following years of deficits and repeated defaults on state debt. He thinks that in time, these actions will help the nation regain the trust of international investors.
Milei’s emphasis on attaining a fiscal surplus has helped the financial markets, as evidenced by the sharp rise in bonds and stocks despite the current economic hardship.
The whole economy has been negatively impacted, leading to increased rates of poverty and homelessness. Milei is still optimistic that the strict budgetary measures would ultimately result in an improvement in the economy.
The first quarter’s data revealed a 5.1{d38a898658503095d09ccca72b3373e8fa824aa4f0215737cc70c89fc7ca3936} year-over-year decline in the economy, which was marginally better than the 5.25 percent reduction that economists had predicted.
Every year, private consumption fell by 6.7{d38a898658503095d09ccca72b3373e8fa824aa4f0215737cc70c89fc7ca3936}, while public consumption fell by 5{d38a898658503095d09ccca72b3373e8fa824aa4f0215737cc70c89fc7ca3936} in the same time frame.
The percentage of imports that decreased significantly was 20.1{d38a898658503095d09ccca72b3373e8fa824aa4f0215737cc70c89fc7ca3936}, while the percentage of exports that increased significantly was 26.1{d38a898658503095d09ccca72b3373e8fa824aa4f0215737cc70c89fc7ca3936}.
