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Source: Global Risk Insights
By: Petr Bohacek

Challenging transformation

The main question for Argentina in 2016 was whether Macri’s reforms would deliver promised improvements before their initial adverse effects turned people against the president. There is no real answer yet.

Unemployment remains high at almost 11%. In combination with inflation of around 40%, this should be lethal, politically speaking. Planned dramatic increases in gas and transportation prices as well as Macri’s veto of the anti-layoff bill sent people protesting throughout the year. The deficit keeps growing. It went from 38.9bn pesos (2.5bn USD) in September to 37.2bn pesos in August, and the government was forced to increase its 2017 deficit target from 3.3% to 4.2% of GDP. Persistent bad access to credit further complicates the business environment and foreign capital has not yet made its arrival.

The task of turning the country characterised by invincible Peronism and pro-workers movements would seem almost impossible, especially after years of protectionist measures by the Kirchners. The wait for reforms to yield benefits is getting longer and the promises of growth, acceptable inflation, competitiveness and opportunities by Macri are under ever-growing questioning. However, there have been successes.