Argentina's peso has enormously lost its worth (further explained here) in large part due to government restrictions on its exchanges with the dollar. In response to this, the government quickly tried to loosen some of these restraints, but inflation is still high and the overall problem continues.
How should Argentina's government go about dealing with this hard time? In the past, Argentina has remained strong due to its agriculture, although there are currently disputes between the government and many farmers. Should the government insert more policies into the nation? Or should it count on its industry to bolster the value of the peso?
The article on loosening restrictions is here and a general summary of the problem can be found here
1 comment:
I think it’s interesting to look at how the agricultural sector has been affected by the Argentine economic crisis. With inflation rates expected to hover around 30%, the government is partially blaming the agricultural sector, one of Argentina’s most profitable markets. Now, rural Argentina is becoming even more separated from urban Argentina, because rural, agricultural Argentina is frustrated with the government. According to one of the article’s sources, the government has been taking more and more of what farmers make since 2008.
As far as improving Argentina’s overall well-being economically, I’m wondering if it is more beneficial to prioritize the short-term or long-term benefits. According to the analysis by Andrew Walker, a more flexible peso could cause more issues; Argentine businesses could become more competitive, but inflation rates would likely increase.
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