Argentina: Javier Milei's austerity shock plunges the country into recession

2024-03-28T05:41:01.403Z

Highlights: Household consumption is in free fall, and economic activity contracted by 4.3% in January. Since the start of budgetary austerity and the 50% devaluation of the peso in December, Argentines have lost 18% of purchasing power. In construction, the sector most affected due to the freezing of public worksites, more than 100,000 people have lost their jobs since December. Sales by small and medium-sized businesses fell by 28.5% and large firms are also struggling.

Argentina plunges into recession. Household consumption is in free fall, and economic activity contracted by 4.3% in January. If the “austerity shock” decreed by Javier Milei…

Argentina: Javier Milei's austerity shock plunges the country into recession

Argentina plunges into recession. Household consumption is in free fall, and economic activity contracted by 4.3% in January. If the “

austerity shock

” decreed by Javier Milei has made it possible to restore order to the public accounts and bring down inflation, it is also weighing down the country's economy.

Argentinian President Javier Milei during the World Economic Forum in Davos, January 17, 2024. AFP - FABRICE COFFRINI

By: RFI Follow

With our correspondent in Buenos Aires,

Théo Conscience

A little more than three months after

Javier Milei came to power

Argentina

, the financial markets are celebrating, but the indicators of the real economy are at half mast. Since the start of budgetary austerity and the 50% devaluation of the peso in December, Argentines have lost 18% of purchasing power, and must now draw on their savings to meet their daily expenses.

If the mining and agricultural sectors, big winners from the deregulations put in place by the Argentine president, are spared, economic activity contracted by 4.3% in January. In construction, the sector most affected due to the freezing of public worksites, more than 100,000 people have lost their jobs since December, according to sector representatives.

Sales by small and medium-sized businesses fell by 28.5% in January, and large firms are also struggling. The 5 factories and 2,500 employees of the Acindar group, a subsidiary of Arcelor Mittal, have been at a standstill for a month. While General Motors also extended the suspension of activity at its Santa Fe factory, yesterday, it was Toyota which announced a voluntary departure plan for 400 employees.

Also readArgentina: 100 days after his inauguration, Javier Milei has already started his budget cuts

Argentina: Javier Milei's austerity shock plunges the country into recession

Argentina: Javier Milei's austerity shock plunges the country into recession

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