MercoPress. South Atlantic News Agency

Argentina has become “latinamericanized”

After several decades of low poverty Argentina has become highly “latinamericanized” and even with prospects of recovery the country still faces “social emergency” conditions according to a report from a private organization, Fundacion Capital.

Given the upturn of the Argentine economy in 2003, it's estimated that by the end of the current year Argentina's poverty rating will be similar to that of Mexico and Brazil, 32% of the population, but still quiet distant from the lower levels of the nineties.

"This unfortunate "latinamericanization" gives us an idea of the magnitude of the worsening living conditions of the Argentine people", reads the document.

Among the almost biblical suggestions to overcome the situation Fundación Capital argues in favour of counter cyclical measures, that is save when there's abundance and so be prepared for the years of scarcity.

"Given the volatility of the Argentine economy (in the last thirty yeas the country has never seen more than five consecutive years of expansion), given the strong social deterioration with each slump and given the good fiscal performance when recovery, it only seems natural to consider a Counter Cyclical Fiscal Fund". "This instrument should enable the country to transfer genuine resources with the main purpose of alleviating economic activity downfall which history indicates in Argentina have been quiet significant: from a catastrophic drop of 11% in 2002 the country rebounded 9% in 2003".

The report argues that this is particularly important since in the last three downfalls social indicators dropped dramatically and never completely recovered, with additional vulnerability for the following downturn.

According to the latest statistics, Argentina has 17,7 million poor people of which 7,6 million indigent; unemployment is close to 20% (when the head of family programs are not considered), which together with 11% under-employed or looking for jobs, means that "almost one third of the labour force has problems participating in the labour market".

During the 2001/2002 melting of the Argentine economy, activity contracted 11%, salaries purchasing power dropped 25% and 57,7% of the population ended in the poor bracket of which 27,5% indigent.

During the strong recovery of 2003, the economy expanded 8,7%, inflation was stable, unemployment fell six points, real salaries increased 8% and poverty overall dropped almost ten points.

Fundación Capital forecasts that 2004 should be similar to 2003 with a continuing improvement of the economy and social statistics, however not at the pace of last year, and still some way to go before leaving the social "emergency situation".