Javier Mli | Argentina after the Miley ‘shock’: what scenarios can happen after applying economic measures? | Inflation | Prices | Salary | Employment | economy

Others must be approved by Congress. They include the dollarization of the economy, tax and economic reform, and the repeal of the law allowing for the setting of maximum prices and profit margins.

Mira | Inflation: What is expected in some Latin American countries in the first quarter of 2024?

According to the libertarian, this ‘shock’ would have an immediate negative effect on the economy ArgentinaBut it is necessary to move forward in a country stressed by a shortage of dollars and inflation.

“No money, no alternative to adjustment, no alternative to ‘shock’ […] The situation will worsen in the short term, but we will see the results of the effort” said the Argentine president.

The experts consulted indicated that this strategy would have a clear effect in the medium term: a reduction in real wages and employment.

“Earlier, salaries were artificially inflated due to government intervention with subsidies, price controls etc. So their reduction will be a big blow: those working in the private sector will see their income fall due to inflation, as it will continue to rise, while salaries will take time to adjust. It is very difficult for companies to raise salaries in a hectic environment where activities are used every day“explained Marco Ortiz, a monetary policy expert at the Universidad del Pacífico.

Similarly, he pointed out that government employees will suffer as ministries are closed and they are fired.

Read more | Shopping Centres: These are the main functional groups and the next ‘Malls’ to open in 2025

Meanwhile, Hugo Berea, Chief Economist of PPVA Research, warned that at this time the President must be careful in the communication of his policies, so as not to face social violence that, in the long run, could prevent their application.

“That is the fundamental problem Argentina For sustainable growth it should reduce inflation. What is given as a subsidy or bonus today, financed by money emissions, is removed from the wage bill by inflation the next day. So they are positive measures, they are honest about the situation, but the government needs to use political economy: see how the measures will be used, but also see how the public receives them. In the long run they can bounce back in a very positive way, but you have to consider how they interact“, he said.

In the same sense, Rextie’s CFO, Matías Maciel, assured that reforms are the only way forward. mercy Citizens will win if they are supportive.

“We cannot ignore the importance of communication. Because there are so many ‘vibes’, a lot depends on how you communicate, because your words can have a positive or negative reaction. If you don’t communicate positively, there will be a negative reaction from people, and no one can reign in social chaos.“, he said.

Find out in Economics | Congress: They present a motion for impeachment against Economy Minister Alex Contreras.

For now, contact mercy It is a clear opposition to roadblocks in all its social manifestations. His government announced last Thursday that it would tighten security policies to curb street protests: Protesters who block highways and roads will not receive subsidies and other social benefits. Claimants on footpaths will not be affected.

“The government will try to limit social opposition, which is dangerous. For better or for worse, if a person says or feels their freedom of expression or right to protest is limited, they will call others to leave in the future. This is another very important part of government: it is not only implementing but also communicating its planMaycil added.

Like ‘FujiShack’?

In the early 1990s Peru also found itself in an environment of hyperinflation and Alberto Fujimori’s government ‘Fujishack‘, which had immediate effects on the purchasing power of Peruvians, but in the medium and long term they reduced inflation.

Although propositions in theory mercy They are also a ‘shock’ and their results are not necessarily identical due to the different contexts between the two countries.

“Peru previously had inflation of 40% per month.Fujishack‘. Inflation was already averaging 13% in the last quarter of 1990. Surely something like this could happen ArgentinaBut the big difference between the two is that we leave the dirty floating exchange rate [el Banco Central intervenía para que el precio del dólar no se dispare]In Argentina It has been fixed and continues to be fixed. Each country has its own conditions, i.e. Peru has very high inflation and not 170% annually ArgentinaFor examplePeriya said.

Mira | GDP fell 0.82% in October, marking six consecutive months of negative growth

Ortiz, meanwhile, pointed out that the two cases differed in the way Fujimori’s mandate was extended.

“Somehow, Fujimori achieved his long-term reform through a coup d’état. Seeking political balance is complex and mercy Announces packages that face strong opposition from trade unions and civil society. mercy With both houses of Parliament still in the minority, it will be difficult to carry out its activities“, he said.