Economic Situation in Argentina

Informal employment in Latin America is a determining factor in the hunger crisis affecting the region. In a context where long lines of people seek access to food, they lack social security and stability, and have been particularly harmed by the pandemic, exacerbating the situation of poverty. 

The Argentina economy is facing a deep crisis, marked by an estimated population of 47,067,641 and an unemployment rate of 7.6% in the second quarter of 2024. This context has been worsened by persistent inflation and a recession that have driven up poverty, especially among wage earners.

Average salaries reach 970,000 pesos, insufficient to cover the basic basket and maintain an adequate standard of living. This phenomenon of “working poor” is alarming; more than 30% of formal workers fail to surpass the poverty line, doubling last year’s figures. Among those under 14 years old, 67% live in poverty, posing a critical challenge for the country’s future.

As experts point out, hunger is not only a result of the economic crisis but also of the lack of investment in public health and social protection. The anticipated increase in poverty, which could push 500 million people into hunger, reflects how job precariousness prevents families from meeting their basic needs. Informal work leaves millions without access to assistance in times of crisis, further aggravating their vulnerability to hunger.

Argentina has experienced four interrelated economic phenomena over the last decade: a decline in economic activity, with a 3.4% reduction over the last ten years; inflation; currency exchange volatility; and the implementation of foreign exchange controls. This combination has created structural problems that severely deteriorate the situation of the middle class.

Over the past 40 years, poverty rates have fluctuated significantly, reaching critical levels during crises such as that of 2001. Compared to other Latin American countries, Argentina shows significantly lower GDP growth (7.5%) than nations like Chile, Colombia, and Uruguay, which have experienced growth rates of 161%, 94%, and 91%, respectively. Additionally, these countries enjoy single-digit inflation, highlighting Argentina’s economic instability.

The pandemic has also complicated the scenario, leading many countries to excessively print money to mitigate its effects. While some have managed to recover within a year, Argentina continues to grapple with high inflation, a result of uncontrolled money printing. To address this crisis, it is crucial to enhance private initiative, particularly through small and medium-sized enterprises (SMEs). Private investment has fallen by 23.8%, and it is essential for the investment-to-GDP ratio, currently around 15%, to grow.

Stabilizing the macroeconomic framework and eliminating foreign exchange controls are essential steps to promote investment. Without accessible credit for the private sector, entrepreneurship is severely limited. Although there are attempts by the government to negotiate with international banks and facilitate the issuance of negotiable obligations at reasonable rates, the immediate future remains uncertain.

https://www.indec.gob.ar/

https://www.cipo360.com.ar/noticias/2024/10/01/25948-crisis-del-trabajo-formal-mas-de-2-millones-de-trabajadores-en-blanco-son-pobres

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