Argentina's Inflation Was Around 200% in 2023 — And It Could Get Worse in 2024: New Leadership Says It Will Take Time To Reverse
Argentina’s inflation rate was around 200% in 2023, according to Reuters. Food prices in particular rose much faster than anticipated, making it hard for everyday citizens to afford basic staples like meat and vegetables.
For many Argentines, this will not be their first battle with hyperinflation. In the '90s, Argentina experienced inflation that reached more than 2,000% annually, according to the International Monetary Fund.
Last November, Argentine citizens elected political outsider Javier Milei as the country’s new president in a run-off election. Milei, who has a background as an economics professor, ran his campaign on bringing inflation down. His message resonated especially well with young adults who grew up during the hyperinflationary period in the '90s.
But, Milei has said it would take time for his administration to bring inflation lower. Milei has only been in office for about a month and things could get worse before they get better. One Argentine economist believed inflation could reach 500% this year, per Yahoo Finance.
Part of Milei’s efforts to curb inflation has been to cut back on government spending and subsidies. Some experts believe this could have the opposite effect and lead to higher prices for consumers in the short term. But, Milei plans to cut many government programs and hopes that without high government spending, inflation will cool in the long run.
Price Action: Overall, investors appear to be not too concerned with the economic situation in Argentina. Global X ETF's MSCI Argentina ETF (NYSE:ARGT) is still up nearly 10% in the past six months. Other companies with significant exposure, like MercadoLibre Inc (NASDAQ:MELI) are also trading higher in the last six months. But, some individual names were hit in the last month, such as Telecom Argentina SA (NYSE:TEO) and Banco Macro SA ADR (NYSE:BMA).
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