In a world grappling with widespread poverty, millions face the harsh reality of lacking essentials like food and shelter, often leading to homelessness. UNICEF’s recent alert has shed light on a troubling trend – a significant rise in child poverty within Argentina. Projections paint a grim picture, with estimates pointing towards a potential 70% child poverty rate by early 2023. Factors such as soaring inflation, sluggish economic growth, and stringent austerity measures are fueling this distressing surge, pushing extreme poverty levels to an anticipated 34%, up from 19.4%. UNICEF urgently calls for increased investment to shield children from the impact of these challenges.
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President Javier Milei’s economic policies, aimed at stability but criticized for exacerbating poverty amidst inflation surpassing 250%, are now under intense scrutiny. Despite financial constraints, UNICEF underscores the critical need to prioritize children’s welfare and implement targeted interventions to halt the worsening trend of child poverty. Sebastian Waisgrais, UNICEF’s Social Inclusion and Monitoring Specialist, voices serious apprehensions about the repercussions of persisting with current policies. He warns of a potential 70% child poverty prevalence among Argentina’s youth by early 2024, emphasizing the profound implications for their immediate and long-term well-being. Stay tuned for further updates on this developing situation.
Argentina’s Struggle for Stability
Argentina is the second-largest country in Latin America by size and has the third-largest economy in the region. In the last hundred years, it has faced ups and downs in its economy, going from being very wealthy to struggling with financial crises, huge debts, and high inflation. The country has a history of populism and military rule, which has caused deep divisions in its political culture.
Currently, Argentina is facing serious economic and political challenges, with a growing debt burden, including loans from the International Monetary Fund (IMF). President Javier Milei aims to make significant changes to the country’s economy and politics, focusing on closer ties with the United States and Western countries. This may involve reducing involvement in the Mercosur trade bloc and distancing from China, which is a major trading partner for Argentina.
What is Argentina’s political history?
Argentina’s political history in the twentieth century was dominated by the Justicialist (Peronist) and Radical Civic Union (UCR) parties until 2015 when the Republican Proposal Party (PRO) broke the mold by winning the presidency as a third party. By 2023, Javier Milei of the far-right Libertarians emerged as another outsider leader, continuing the trend of unconventional parties taking the helm.
The country grapples with corruption, institutional distrust, and deep political rifts known as “la grieta.” This polarization between left and right factions often results in political deadlock and abrupt policy changes. Internal power struggles within parties like the Justicialists, including the influential yet controversial Kirchnerism associated with Néstor and Cristina Fernández de Kirchner, have further complicated Argentina’s political landscape.
Despite periods of economic growth under the Kirchner government allegations of fraud tarnished their legacy, leading to legal repercussions for Cristina Fernández de Kirchner. President Fernández faces challenges managing internal party tensions, affecting the Peronist faction’s popularity. The ascent of Radical Libertarian Javier Milei, nicknamed “El Loco,” in 2023 underscored the country’s divisions, as he advocates for substantial economic and political transformations, including downsizing government ministries and proposing bold policies on various contentious issues.
How did Argentina’s economy develop?
Argentina has a history of economic fluctuations, from being a prosperous nation in the late 19th and early 20th centuries to facing severe downturns in later years. The country’s overreliance on commodity exports and unsustainable government spending led to frequent boom-bust cycles, earning it the moniker of the ‘Argentina paradox.’
In the 1990s, market-friendly reforms aimed to stabilize the economy through trade liberalization and currency pegging. However, the abandonment of the peg in 2001 resulted in a devastating economic crisis, leading to the largest default in Argentina’s history.
Following the crisis, left-wing politics saw a revival under Nestor Kirchner, aided by a global commodities boom. Yet, his successor, Cristina Fernandez de Kirchner, faced criticism for controversial economic policies and increasing public debt.
Mauricio Macri’s administration attempted to improve the economic situation through reforms but faced setbacks, including a significant loan agreement with the IMF. Alberto Fernandez’s return to Peronist policies led to further economic restructuring attempts, including bond restructuring in 2020.
What are the main economic challenges right now?
Argentina has a big potential for its economy. It’s the third-largest economy in Latin America after Brazil and Mexico. In 2022, its gross domestic product (GDP) was $631 billion. More than half of Argentina’s money comes from services like tourism. Manufacturing industries like making cars, medicine, and chemicals make up 16 percent of the money. Farming, which used to be very important, now only makes up 7 percent of the money. But it still makes most of Argentina’s things to sell to other countries. Argentina also has a lot of shale oil and gas. However the government is starting to use more renewable energy. Also, Argentina has about a fifth of South America’s Lithium Triangle. This area has about half of all the lithium in the world. Lithium is very important for making batteries.
Global Relations
Amidst ongoing economic and political uncertainties, Argentina has been actively engaging with global powers, notably China, the United States, and the European Union.
China: Over the past two decades, Argentina has deepened its trade relations with China, becoming its second-largest trade partner. Argentina’s participation in China’s Belt and Road Initiative has further strengthened ties, with significant Chinese investments in various sectors such as agriculture, infrastructure, and telecommunications.
United States: Argentina’s relationship with the United States has fluctuated over time, influenced by domestic political dynamics. While past tensions arose due to ideological differences, recent administrations have sought closer ties. Argentina has been a major non-NATO ally of the United States since 1998.
European Union: Bilateral relations between Argentina and the EU are managed through trade frameworks and agreements on various sectors. The EU remains a significant destination for Argentina’s exports, and European companies are substantial investors in the country. Efforts to ratify a free trade agreement between Mercosur and the EU are ongoing but face obstacles.
The World Bank in Argentina
Despite a 5% economic growth in 2022, Argentina faced a 2.5% negative growth in 2023 due to a devastating drought, yet anticipates a rebound in 2024 driven by improved weather conditions and strategic investments in energy sectors. However, the drought exacerbated existing macroeconomic imbalances, escalating annual inflation to 124% in August 2023 and elevating poverty levels, with 40.1% of the population living in poverty and 9.1% in extreme poverty by September 2023.
Amidst economic challenges, Argentina entered into a 30-month Extended Fund Facility (EFF) with the International Monetary Fund (IMF) in early 2022. While missing key program targets due to the drought, Argentina secured access to approximately US$7.5 billion by August 2023, coupled with modifications to fiscal and monetary policies to safeguard stability and pursue program objectives.
In Conclusion, Argentina stands at a critical juncture, grappling with complex economic, political, and geopolitical challenges. As the nation navigates this landscape of uncertainty, the decisions made in the corridors of power will shape its future trajectory and determine its role on the global stage.
