In Argentina, the economic malaise sets in, the consumption fall

Monica Pesce, a hairdresser of Belgrano, in her hair salon, Buenos Aires, 23 June, 2018 (Photo Alejandro PAGNI. AFP)

Etranglés by a price rise that is accelerating, the Argentines agree to limit their spending and, while the government had announced a halt to inflation, the economic malaise is growing.

“There are days, I have no client,” sorry Monica Pesce, a hairdresser of Belgrano, a residential district of Buenos Aires, far from being disadvantaged.

“I came to settle here, for the high density of population. In face, I have a building of 37 apartments. But the activity has gone down, the lounge is empty,” says the hairdresser, who finance the university studies of her daughter and pay two rents, one to his apartment, in addition to the hair salon.

“The inflation, she says, brings anguish and fear” of not being able to make ends meet. To the extent that it fears the increase of its rental income, revalued twice a year.

In the race against inflation, employees lose out. The rising bills of gas, electricity, water, public transit tickets is faster than the corrections payroll.

Small businesses are the first to suffer. And there is no improvement on the horizon.

– Flour: +300% –

In his bakery of Villa Urquiza, another area rather contributed to the capital of argentina, Luis Miranda has eight employees. In march, he has increased salaries by 15%, the target of annual inflation of the government.

Since then, the peso has lost more than 25% of its value against the dollar, which has boosted inflation. The 3rd economy in Latin America has appealed to the international monetary Fund (IMF) for a loan, in order to stabilize the exchange rate.

The prognosis of inflation for 2018 is then moved from 15 to 27%.

“I thought the economic conditions would continue to improve, as it was the case since the beginning of the mandate (the president of the centre-right Mauricio) Macri, but in march, prices have skyrocketed and it never stops. The economy is unpredictable. The price of flour has increased between 300 and 400 percent,” complains the boss of the bakery.

Miranda has not lost customers, because of the bread, this is what we stop to eat last, “but the consumption has fallen. Nobody buys a kilo of bread. People spend as much, but they buy less in quantity”.

To compensate for this shortfall, it offers dishes that are buying the labourers working on the construction sites of the district, or office workers.

According to the argentine Confederation of the enterprises of SMES, the sales in retail stores were down 2.5% during the first five months of 2018.

– Imports –

“In the short term, the promise of economic recovery is not required. Polls show that the popularity rating of the government declining,” observes the sociologist Ricardo Rouvier, to explain the irritation of the Argentinians.

On 25 June, a general strike has paralyzed argentina’s capital city and a part of the country, a warning of the unions to the government, which maintains the cap of an austerity painful for the majority of Argentines.

Came to power at the end of 2015, Mauricio Macri has broken with the policy of the left of the ex-president Cristina Kirchner (2007-2015) to establish a management more liberal. He had promised to curb inflation, which exceeds 20% over the past ten years, but it is not able to curb the rising prices.

Gerardo Labozzetta, the owner of a small factory that provides parts for the automotive industry, shut down for two years, complained of the arrival on the market of imported products, mainly from China, and the low access to bank credit.

“The opening of imports has hurt productivity”, said the head of the company, who directly employed 18 people and 15 indirectly.

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