Argentina’s currency last year took a huge hit since President Macri asked the IMF for a loan earlier than expected. The markets responded and there was a huge drop in the value of the peso.
For many local businesses, attracting foreign tourists is a great benefit. Due to Argentina’s currency slide in the last 9 months, it has become an attractive destination for tourists to visit.
Pain et Vin, a wine bar and bakery based in Palermo in Buenos Aires, said: “We work nearly 100% with tourists so the crisis hasn’t affected us as much and tourism has even increased a little.”
The business added: “The problem is that costs have increased more than ever. Electricity, wages, social security charges, ingredients and more. However, we don’t think we can complain in the same way as other businesses who depend on Argentines. Argentine consumption has decreased a lot!”
Don Julio, a well known parilla located in the same area, seemed to concur: “Our business in these times is evolving differently to the economic variables in the country.”
The effects have hit Argentine consumers, with poverty spiking to 33.6% according to the Argentine Social Debt Observatory. This is its highest level in eight years and translates to about 13.8 million people living in poverty in the South American country.
Out of the figures, 2.47 million are considered to be living in extreme poverty.
The peso’s devaluation has reached almost 52% this year with inflation expected to finish above 40% at the end of the year.
Macri, who faces elections this year, must deal with social discontent as citizens have faced increasing prices and have less purchasing power.
The president has accepted $56.3 billion in IMF funding but, in exchange, must eliminate the primary fiscal deficit by 2019.