A sung ending: Kirchnerism closes 2023 with a new decline in economic activity, the second of the cycle that began in 2020. Together with annual inflation that hovers comfortably around 200%, to a real salary that continues to fall without brakes and to poverty that is approaching 50%Alberto Fernández, Cristina Kirchner and Sergio Massa have just left the government with a huge contribution to the increasingly infamous and widespread Argentine decadence.
At a certain point, the trio’s performance recreates a couple of consolidated definitions on the evolution of the Argentine economy. “It hasn’t grown since 2011”says one of them and the other, “It has been stagnant for ten years.”
But the issue is not strictly that there has been no growth since 2011, but rather that since 2011 we have entered an area of ups and downs, with more downs than ups, which has continued into 2023 and whose toll fluctuates, to 2004 constant. prices, that today’s GDP is just 1.5% higher than that of twelve years agoS. We are no longer talking about a decade of delay but rather about a decade. And we seek more.
The alternative of measuring the phenomenon based on GDP per capita, if you want a more representative indicator of the state we find ourselves in, says Fall and 10% drop.. In other words, we are worse off this way.
Cristina’s economy
It is clear that a less than commendable government of Mauricio Macri was involved, but the axis of this process passes through the management Cristina K: president from 2007 to 2015 and vice president from 2019 to 2023. That is nine years at the Casa Rosada of the twelve that began in 2011 and four of which with the GDP below zero.
Obviously, an economy that isn’t growing It doesn’t even create jobs. or, as in the case of Argentina, much of what is created is low quality, precarious and ultimately cheap.
According to data from the Ministry of Labor in the first quarter of 2023 Employees without pension discount amounted to 3.6 million and non-employee workers to 3.4 million. That is, 7 million people who fall into the black or similarly colored job category and who They represent almost 54% of employed people.
According to official statistics, employees with pension discounts, in good standing and protected by fundamental labor and social standards, reach 6.2 million, or the remaining 46%.
It goes without saying: the work that is growing is that on the borders of the system, imperious, poorly paid and without state coverage. This was clearly seen in the fact that, after the pandemic and a strong destruction of jobs, only illegal work really recovered.
In this bulletin, the case of industry comes to mind, an activity that generates better, safer and usually well-paid work. Between October 2013 and April 2023 in that sector no fewer than 81,000 jobs were lost, an unprecedented number. And the explanation was right there: in haywire, the sector had collapsed by 30% from 2013 to 2023.
There is nothing new even in stating that private investments are a fundamental element within the production processes and in immediately adding that here they have been and are a scarce or even absent factor during the twelve years of stagnation and backwardness.
Since 2011, therefore, this commitment to the growth and modernization of the country has never exceeded the threshold of 20% of GDP. It didn’t even make a dent: in fact, it reached the modest territory of 17%.
Just to put these figures into a bigger picture, it’s worth adding that private investment is averaging 20% in Latin America and is progressing towards around 23% in the region’s high-income assets. Among the emerging and more-than-emerging countries of Asia the figure jumps to 40% of GDP; i.e. in China, India, Indonesia and the Philippines, among others.
The explanation for our numbers is directly linked to our economic and social decline. Furthermore, of permanent instability of the rules that are constantly changing, of uncontrolled inflation and all that we know very well. It is not a scenario that encourages the decision to invest money in the long term, but rather one that, if running away isn’t enough, requires safe, very profitable and, if possible, state-subsidized businesses.
There is something similar missing or lacking in the conditions and magnitude in which they are needed. It is called infrastructure, that is, ports, communications, electricity, routes, roads and a package of works which ultimately translates into cost reduction and competitivenessD.
In the terms in which we know it, it means public investment but also social investment. Here we are back again. According to INDEC data, since 2004 spending on infrastructure has never exceeded 3% of GDP: in recent times, of Kirchnerism which proclaimed itself the champion of the current state, it was equal to 1.6% in 2020; 2.1% in 2021 and 2.4%.
Nearby, in the neighborhood, we have 9% in Chile; 7% in Peru and approximately 8% in Brazil. We are talking, if necessary, about percentages up to four times higher than those recorded by Argentina. And we are also talking about an expense that, although always essential It is usually one of the first to be cut when fiscal adjustment policies dictate.
Javier Milei himself announced, almost without taking it for granted, that state-financed public investments will cease to exist. Trascartón, an official statement announces “the total elimination of state public works”.
It is assumed that sooner or later the Minister of Infrastructure, Guillermo Ferro, will come to explain how this film continues because it is clear that, whatever it is called, public works will not disappear.
Nothing serious, but obligations are obligations, Ferro is facing a floating debt of 20 billion pesos left by his predecessor, Gabriel Katopodis. And a little job that won’t cost him anything: stop favoring Axel Kicillof in the distribution of funds managed by his ministry.
But there are aspects of Milei’s management that recommend something more than a simple adjustment. Clearly the case of the social situation or, if you prefer, that of an inflation that will be around 50% in the two-year period December-January, at most fuel skyrocketing, plus an economy that in 2014 is heading towards another collapse and a real salary that continues to lose overwhelmingly.
Having become the president’s top advisor, Federico Sturzenegger, head of the Central Bank during Macri’s time, explains the fiscal shock as “a strong signal of change that we wanted to give to the market”. And the actors of the real economy for when?
Source: Clarin
