Argentina Economic Inflation is as much as 35 percent annually
As the November 22 presidential election is fast approaching, the economic inflation of 35 percent a year is one of the major issues that the next president of Argentina will have to face.
According to Bloomberg Business, the printing presses in the Argentine Treasury have increased currency circulation by 10 percent in October 2015 to 900 billion pesos, or as much as $94 billion. That is boosting inflation by as much as 35 percent every year, according to Imperial Capital LLC analyst Jeffrey Kessler.
Reuters reported that Argentine presidential candidate Mauricio Macri said on Tuesday that he plans to free up dollars to accommodate imports and remittances to dismantle capital controls. He said it would take some time to address the issue of debt importers' accumulated and profits that foreign companies have been blocked from transferring to their home countries in the past. Rival Daniel Scioli said making dollars available for firms would be top priority if he wins. However, removing capital controls immediately would result to a hemorrhaging of dollars, Scioli warned. According to Scioli's advisers, it would take many years for currency market to normalize.
Meanwhile, the Market Mogul reported that political turmoil will not help the country at the moment. The run-off election coming in November 22 is the first time elections in Argentina will be decided by a second round. Growth has slowed in the third-largest economy in Latin America in the past several years. Its GDP grew by only 0.5 percent in 2014. This is pitiful compared to how much the country made in 2008, during the Global Financial Crisis. Another looming problem is IMF's prediction that the company's economy will decrease by 0.7 Percent by 2016.
Current Argentine president, Cristina Fernandez, four years ago, imposed management measures to stem capital flight and protect the foreign reserves of the country. The nation also resolved to pay for imports and its debt obligations. Argentina has depended on those assets to boost its currency since it suffered from restricted access to global capital markets since it defaulted in 2002. These strategies, however, only worked for a while.