Argentina currently holds the record as the country with the worst inflation of all time. Ironically, Argentina is the third largest economy in Latin America. According to Argentina’s statistics bureau, Argentina’s inflation for the 12 months to February increased to 276.2%. The inflation rate makes price increases in “Tango” higher than Venezuela for the first time in decades. 

The economic impact of worsening inflation starts with rising interest rates. Argentina’s interest rate by the end of 2023 reached 130%. In addition, economic growth experienced an economic recession. Weakened economic activity resulted in a current account deficit that increased by US$3.5 billion in the third quarter of 2023.

According to CNBC, the factors that have caused Argentina to experience worsening inflation are the central bank’s policy of printing too much money, increasing prices of goods, and rising fertiliser prices for agriculture and imported gas prices due to Russia-Ukraine tensions. To address Argentina’s deteriorating condition, President Javier Milei provided a solution called “Shock Therapy”.

To address Argentina’s deteriorating condition, President Javier Milei has come up with a solution called “Shock Therapy”. So far, Milei has cut the value of the currency, reduced public spending, and cut subsidies for transportation, fuel, and energy. 

This tragedy will certainly have many negative impacts on society, so hopefully Argentina’s economic conditions can rise from the downfall that is being experienced.

Author : Fariz 

Source : CNBC News