MercoPress. South Atlantic News Agency
Data confirms Argentina's economy has slid into recession
Argentina’s economic activity index (EMAE), which is seen as a close proxy of GDP, fell 0.5% in April compared with the same month last year, according to data released by the government's stats office Indec. Nonetheless activity went up 0.6% in April compared to March. Read full article
Comments
Disclaimer & comment rulesAnd that is the “official” statistics.
Jul 02nd, 2014 - 12:58 am - Link - Report abuse 0Subtract out their suppressed inflation numbers, overstated currency value, transfer payments, etc. and the truth is probably closer to Economic Free Fall...
The Kirchnerism economic model is running out of steam.
Jul 02nd, 2014 - 01:42 am - Link - Report abuse 0Anyone with an ounce of intelligence has seen this coming for years. So no one should be surprised.
The fact that a recession has hit while inflation is still out of control and the country is about to default again is just amazing timing.
Who will get the blame this time? It can't be IMF and supposedly liberal economic policies that got the blame last time.
There's no easy way to get out of stagflation. If I know these idiots they choose the wrong path.
Jul 02nd, 2014 - 02:57 am - Link - Report abuse 0They'll devalue, juice the economy with more pesos and won't stop until Argentina looks like Venezuela
As I've been saying when this all goes bad its going to go big.
The recession is not the disease its the cure. Kicillof can't fix the problem until he brings the current system to its knees.
Jul 02nd, 2014 - 02:58 am - Link - Report abuse 0“The recession is not the disease its the cure”
Jul 02nd, 2014 - 04:11 am - Link - Report abuse 0That line of reasoning only works if the recession was imposed by concrete actions of the government taking the bitter medicine.
However that is not the case. This recession is caused by the imbalances in the system. It is still part of the disease.
Kicillof hasn't done anything to create this recession. The closest he has come to it is the minor devaluation at the start of the year. As the currency is still not floating freely and the dolar blue is still higher, this was only going to be a short term patch.
When the currency floats freely and there is massive cuts to welfare and subsidies to bring the deficit under control; and a loosening of import and export controls - only then will there be a recession that is part of the cure.
That sort of recession would lead to a drop in imports, expanded exports and a stabilisation of the currency and a drop in the inflation rate as the deficit would no longer be financed by printing pesos.
They will probably print more money. This whirlpool is going to get a lot bigger and faster before this is over.
Jul 02nd, 2014 - 04:46 am - Link - Report abuse 0To get a country out of a morass like stagflation it has to get worse before it gets better. Close unproductive factories, stop printing money, stop giving out unsustainable subsidies etc.
Jul 02nd, 2014 - 04:51 am - Link - Report abuse 0The problem in all these countries is that there are preciously few politicians who have the skills to take a national economy down in a “controlled descent” without crashing it, and few voters willing to let them do so in the first place.
So they get leaders who promise to make everything better, they get elected, and start doling out printed pesos to anyone and everyone to try to make it seem as if they made it better for everyone.
Then one day they wake up to hyperinflation, because there is almost no real economic activity left in the country...
recession
Jul 02nd, 2014 - 10:21 am - Link - Report abuse 0surely not..
5 Anglotino .
Jul 02nd, 2014 - 10:56 am - Link - Report abuse 0You are aware that kicillof has made quite a few changes since he took over, right?
Interest rates have doubled, thereby sucking up countless of billions of pesos, cooling consumption down and redirecting them to fixed term deposits. As a result the free market Peso has stabilized at about 12/US$. He has relaxed the ban on buying foreign currency and using it for personal savings. He has improved INDEC, settled with Repsol, the Paris club, is sorting out the vultures, is reforming the hydrocarbon pricing, is beginning to roll back subsidies etc, etc, etc.
Any one who understands basic economics will agree that there needs to be a lot more work done to bring the economy to a stable footing, but at least he is trying (whilst surrounded by insane people),and the recession is the first of many steps to recovery.
Interest rates are still well below inflation and the peso has been steady while they've been selling the soy crop. That massive inflow stops this month and the reserves have barely budged during this time. Probably because exports of everything else has plummeted.
Jul 02nd, 2014 - 01:10 pm - Link - Report abuse 0They are not smart enough to stop this collapse.
I still think it will be default,devalue,hyperinflation, crash. I've not seen anything to change my mind on how this will roll out.
The Chilean perspective
Jul 02nd, 2014 - 01:52 pm - Link - Report abuse 0Nothing you have said Kicillof has done has caused a recession.
The recession has been caused by the economic system reaching crisis point. Not because of anything that has been done to reform that economic system.
The work hasn't even been started.
BTW BCRA is flooding the system with pesos to make up for federal and provincial shortfalls.
Jul 02nd, 2014 - 02:00 pm - Link - Report abuse 0There's no way to fix this sinking ship that doesn't involve a generation of austerity.
They needed to look at the false data to conclude that??
Jul 02nd, 2014 - 03:42 pm - Link - Report abuse 013.
Jul 02nd, 2014 - 04:12 pm - Link - Report abuse 0Yep, I think its time international organisations like the WB, IMF, UN simply declare all Arg, numbers and data as non available. Like North Korea
Stagflation is a pig to deal with. So much so i'm not even sure it's possible under most conditions.
Jul 02nd, 2014 - 04:39 pm - Link - Report abuse 0You have no growth you can leverage with an interest rate hike to control inflation and your currency is already borked so quantitative easing (or any other analogue you care to mention) to pump a bit of liquidity back into the financial system to get things moving again would just make the situation worse.
Besides, the treasury is critically low already, there's precious little spare capital to do ANYTHING with.
I'm not sure I can see any measures that could be taken other than another sovereign default or ditching the peso in favour of a new one pegged strictly to the US$ (bit early to predict hyperinflation but the possibility is there).
This is just very technical subject which should not be discussed at media.
Jul 02nd, 2014 - 04:56 pm - Link - Report abuse 0you must agree that the Argentina Economy is very spesific/rough/complicated/chaotic ....
Also the last media noise is not related to Economy and debt payback. !
Anyone with a 2 digit IQ is smart enough to know there's no escaping economic turmoil coming in short order to Argentina.
Jul 02nd, 2014 - 05:30 pm - Link - Report abuse 010 yankeeboy
Jul 03rd, 2014 - 10:44 am - Link - Report abuse 0“Interest rates are still well below inflation”
Two years ago the Argentine car industry were handing out no doc loans at 0% interest whist they had an official inflation rate of 10.9% (25% unofficially). Today the car loans are 69% and no one is buying.
@9 The rise in interest rates was not done by Kicillof but by Fabrega, someone who does know something about economics, unlike Kicillof. But unfortunately CFK has listened to Kicillof who wants to keep printing money so it was only a band-aid. Fabrega will most likely resign soon. I don''t expect any mayor reforms as long as CFK is in power, except maybe for some cuts in subsidies for the upper class.
Jul 03rd, 2014 - 07:09 pm - Link - Report abuse 0:) not long now
Jul 03rd, 2014 - 11:11 pm - Link - Report abuse 0Commenting for this story is now closed.
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