The Economic Impact of President Macri's ReformsWhile in Argentina, we heard a lot about the fiscal issues the country had in the past, and the reforms that the new President Mauricio Macri was enacting to stimulate the economy. It appears that his policies have begun to have an impact on some Argentinians, at least at the highest level of wealth in the country. Seven of the richest Argentinians in the country have seen their wealth drastically improved since President Macri took office. These people include Alejandro Bulgheroni, energy entrepreneur with a net worth of US$3.3 billion; Eduardo Eurnekian, airline entrepreneur with a net worth of US$2.3 billion; and Alejandro Roemmers, pharmaceutical entrepreneur whose net worth has DOUBLED in the past year to US$2 billion.
On the flip side, there have been a number of reports about the lower income classes struggling since President Macri took office. According to the Catholic University of Argentina, 1.5 million people have been pushed into poverty since President Macri took office in December 2015. From the end of 2015 to the 3rd quarter of 2016, poverty went up 3.9%. In September 2016, President Macri was forced to admit that 1 in 3 Argentinians live in poverty. In addition, his reforms have led to a drastic increase in the price of goods and services; in October '15 Argentina's inflation rate was 14.3%, and by April 2016 it had reached 40.5%. So this begs the question--are Macri's reforms really helping to improve Argentina's economy?
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Giancarlo DiFranco
As many foreign countries demonstrate, Argentina’s love for food is demonstrated in each and every meal. It is an interesting mix between Italian and Spanish food which makes sense given the heavy Italian population however they are able to add a Spanish flare to make it unique to Argentina. Theyir number one meal consists of beef prepared in various ways with their most popular, Asado. Asado not only represents a meal, however it represents a tradition and places importance on family and relationships. From a young age, children play cards as their fathers prepare the Asado over the grille. Meat, however, is not all the country has to offer. Argentina is also known for their Empanadas which often times come prepared with cheese, spinach, or your meat options, chicken and beef. And do not forget the Dulce de leche! A common caramel used in desserts and even some breakfast pastries, it’s unbelievable taste can be found anywhere! http://www.economist.com/news/americas/21712129-end-reformist-presidents-long-honeymoon-recession-emboldens-argentinas-opposition
While Argentina's current president, Mauricio Macri, has been able to implement many measures to reform Argentina's economy, he still faces a lot of challenges and pressure from both the people of Argentina and the politicians in the country. Despite limiting government debt and getting the country access to capital markets, the president still must deal with a decrease in household income, a decrease in GDP for 2016, and a collapse in the construction market. There is now controversy over how to address these issues with some politicians lobbying to increase the amount of tax free income which would limit Macri's ability to lower the government's debt. While Argentina has taken several important steps to bolster its economy there is still a lot to accomplish and there is a big divide between politicians over how to better support the economy. Argentina is hoping for a growth in GDP in 2017 but this depends a lot on external factors such as Brazil's economic recovery. It seems that the president will have to continue to implement measures to help Argentina's economy recover from years of economic turmoil. Anne Lebold Tiffany Lyons
Given our current political environment and all of our internal questions about where our country will go under Trump's leadership I thought it would be interesting to have an outsider's opinion. According to Finance minister Nicolás Dujovne protectionism and cutting America off from international trade is not a smart move. This article takes a stand against protectionism and gives some insight into Argentina's past economics and experience. https://www.theguardian.com/world/2017/mar/21/trump-trade-deal-argentina-g-20 The article I read talks about Argentina’s potential to be a leading supplier of lithium. It states Argentina could realistically supply half of the world’s lithium if the infrastructure is put in place. While Argentina’s lithium reserves are not new, the country’s president is. Macri’s tax reforms and attempts to show the world economy that Argentina wants to be involved are great steps in the right direction.
The one IF not discussed in the article is whether or not the infrastructure investment will come. While global mining companies are interested, they also want to see more stability before entering. This will be a problem Argentina faces in many areas since companies want to stability to invest but investment must happen for stability.
By Matt Randall
Bitcoin is a unique new financial technology that has received significant attention for its novelty and potential to change the game in many places. One of these places where Bitcoin has had a significant impact is Argentina. In fact, in July 2016, Argentina and Venezuela were the two countries where Bitcoin was used the most. Catie's article right below this one highlights how this technology has help Uber thrive in Buenos Aires. So why is this the case? The answer lies with the unique aspects of stability and security that come with Bitcoin . Bitcoin is a cryptocurrency and a payment system that was invented in early 2009 by programmers who remain unknown. The system is peer-to-peer with no intermediary, no central repository, and no regulators, making it a truly decentralized digital currency. This makes it impossible to print more bitcoins, like governments have the ability to do when they need money. Because of this, the currency is attractive to areas experiencing significant inflation (like Argentina). During the last two decades, financial stability in Argentina has been poor and foreign investment is difficult to secure. At the end of 2014, for example, the peso was worth 25% less than it was at the beginning of the year. This uncertainty of the peso and other public policies making foreign investment difficult have turned bitcoin into an attractive alternative due to its security and independence from government interference. Today, there are many startups in Buenos Aires specifically getting into the market of Bitcoin. The best known Bitcoin startup in Argentina, BitPagos, helps over 200 hotels take credit card payments from foreigners and allows these hotels to circumvent government restrictions and fees on receiving money from abroad. Others like Avalancha, an online retailer, are accepting bitcoin and offering customers a 10% discount when they pay with Bitcoin - because accepting credit cards ends up costing Avalancha more that 10% of the price due to the Argentine financial system. The Bitcoin community is so popular in Buenos Aires that it has produced the "Bitcoin Embassy" in the center of the city - a four story building housing eight start-ups whose businesses depend entirely on the Bitcoin network. The energy around bitcoin is like nowhere else in the world. What the future holds for Bitcoin and Argentina remains unknown, but right now the Bitcoin community is vibrant and thriving in Buenos Aires. https://www.nytimes.com/2015/05/03/magazine/how-bitcoin-is-disrupting-argentinas-economy.html?_r=0 http://svlatino.com/2016/07/25/the-rise-of-argentinas-startup-scene/ By: Catherine Humphrey
Although Uber has completely taken over the economy in the United States, the Argentinian government has done everything within its power to ensure Uber's failure in Argentina in an attempt to save the jobs of Taxi drivers. The government primarily accomplished this by blocking credit card services from allowing Uber transactions to go through. However, an unlikely savior came to the rescue in mid 2016: Bitcoin. A user friendly app called ‘Xapo’ arrived in Argentina last year which allows peer to peer transfer (and storage) of bitcoin, free of charge and free of government intervention/regulation. The government is unable to track these transactions because bitcoin is a completely autonomous, de-centralized, non-government issued cryptocurrency. When Xapo was first launched, the app processed an average of ~18,000 rides per week, just in Buenos Aires. Xapo has also considered issuing debit cards, however, these would be more easily blocked by governmental authorities. Finally, although bitcoin is currently a solution to working around the government, it seems as if it is only a matter of time before the Argentinian government figures out a way to once again block Xapo transactions with Uber. https://news.bitcoin.com/uber-thriving-argentina-bitcoin/ Humzah A. Quereshy In light of economic struggle in Argentina, the Macri administration is seeking out the opportunity to exploit its heavy shale oil reserves that were recently discovered in the Vaca Muerta reserve. Particularly, this is an opportunity to completely revitalize its own oil and gas industry, while establishing itself as a major exporter in a global market that is seeing supply fall drastically. However, because of a waning economy, Argentina doesn't have the infrastructure to support such exploration. In this way, the Argentine government has the difficult task of attracting foreign investment with fiscal and monetary policy that will, in the short term, restore Argentina to a status of energy self-sufficiency. In the status quo, falling oil prices make exploration unattractive for foreign oil investors. This gives the Macri administration ample time to develop long-term policies that will support the Argentine oil industry, generating incentives for firms to work in Argentina over other countries.
The discovery of new shale oil reserves in Argentina provides a new level of hope for the economy with adverse economic projections and a energy crisis that many scholars were deeming as severe. Outside of the United States, Argentina's oil and gas potential has become the most pure and sought-out on the global market. Transitioning Argentina's oil industry from theoretical to a reality requires significant investment and governmental incentives that help companies overcome the steep drop in prices of oil. Particularly, scholars are estimating the annual cost of 19 billion US dollars for productive oil exploration. Fortunately for the Argentine economy, in the past several years, as oil prices have become relatively stable and the supply of oil is rapidly waning, companies are being pressed with the necessity to explore the Vaca Muerta reserves. Just one week ago, Shell oil has announced a partnership with Argentine oil company YPF for a 300 million dollar investment to develop a shale oil and gas reserve that is expected to yield excellent results. Shell's investment is just scratching the surface of the level of investment that will rapidly come into Argentina. There's plenty of oil to go around. Sources: https://www.wilsoncenter.org/sites/default/files/argentinasoilgas.vasquez.pdf https://au.finance.yahoo.com/news/shell-plans-300-mn-investment-102413804.html By: Rebekah Paul
Magellanic penguins are a small, warm-weather variety of penguin that breed in southern Argentina and Chile. The flightless birds descend upon the Punta Tombo peninsula each year to migrate. This year, a record breaking one million penguins gathered to feast on fish prior to migrating. Thousands of tourists follow the penguins' annual migration and have been working with conservationists to help protect the species. The article below describes the migration patterns of the interesting species and also creates awareness of the factors threatening the penguin population. http://www.independent.co.uk/news/world/americas/million-magellanic-penguins-argentina-punta-tombo-visit-chicks-feed-threatened-species-migrate-a7587636.html After years of political and economic instability, Argentina elected a new president in 2015 that has worked to invest in culture as a means for growth. There has been an effort throughout the country to promote the arts in low income areas as well as spread the talent of Argentinian artists around the world. Buenos Aires has formed a partnership with Art Basel to learn how to help the art industry flourish, and how to use it as a means to promote tourism to the country.
Although expression through art has always been common, the Argentinian art scene needs interest from outside its own borders in order to grow and be a useful means of supporting the economy. The government therefore subsidizes artists' participation in art fairs and shows around the world. However, the government's involvement in the notoriety of the Argentina's art scene must be carefully planned so that the integrity of the artists is left intact. http://theartnewspaper.com/market/argentina-ends-years-of-isolation/ -Abigail Radcliffe |
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