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The Trouble with Argentina’s Economy

With sustained economic growth, Argentina would be able to avoid another debt crisis. Although there are no silver bullets to put the economy on a more stable path, changing current macroeconomic policies would at least give the country a chance.

NEW YORK – In 2018, Argentina experienced a currency crisis and stagflation. Annual inflation reached 47.6%, GDP fell by 2.5%, and unemployment and poverty increased.

These indicators reflect chronic problems. Argentina’s economy has shrunk in four out of the past seven years. And, for more than a decade, structural deficiencies have created tight constraints on the growth of real demand and prevented the economy from growing sustainably. 

When the current government, led by President Mauricio Macri, took office in December 2015, it said that its economic policies would attract foreign direct investment and lead to sustained increases in productivity. The currency crisis that erupted in April 2018 underscored the failure of its policy approach.

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