Why is Argentina so weak?
The pandemic has accelerated an exodus of foreign investment, which has pushed down the value of the Argentine peso. That has increased the costs of imports like food and fertilizer, and kept the inflation rate above 40 percent. More than four in 10 Argentines are mired in poverty.
What currency is Argentina’s debt in?
Crisis and Initial Policy Response Investors began selling Argentine assets, putting downward pressure on the peso (Figure 1). With most of its debt denominated in dollars, a depreciated peso increased the value of the debt in terms of pesos.
Why is Argentina inflation so bad?
As is always the case with rapid inflation, the price increase in Argentina was fueled by rapid expansion of the money supply. The seigniorage earned from monetary expansion served the needs of the government as a method of taxation that was difficult to avoid and politically easy to enact.
What are the consequences of sovereign default?
Sovereign default may result in a government facing higher interest rates and a lower credit rating among lenders, making it more difficult to borrow. Sovereigns who borrow in terms of their own currency may have the option of printing more money and “inflating” their way out of debt.
What has caused Argentina’s economic crisis?
Decades of high inflation and the erosion of the currency’s value, coupled with the trauma of the 2001-02 corralito financial crisis when Argentines were unable to access their personal bank accounts for almost a year (and when they were, it was only to find that their dollar deposits had been exchanged for devalued …
How is Argentina economy today?
Argentina is a developing country. Its economy is the second-largest national economy in South America, behind Brazil….Economy of Argentina.
| Statistics | |
|---|---|
| GDP growth | −2.5% (2018) −2.1% (2019) −9.9% (2020) +5.8% (2021f) |
| GDP per capita | $9,122 (nominal, 2021 est.) $22,141 (PPP, 2021 est.) |
Which countries defaulted debt?
Since the end of 2019, six countries (Argentina, Belize, Ecuador, Lebanon, Suriname, and Zambia) have defaulted on sovereign debt obligations. Public debt in emerging markets (excluding China) is expected to reach 61% of GDP in 2021.