As the value of its currency continues to fall and its economy edges nearer to collapse, Argentina’s government is scrambling to establish new measures to protect its currency and to save the country from a long-term recession. The government recently proposed a new plan for the 2019 budget which now includes various initiatives to cut government spending.
Since the start of the Bolivarian Revolution in Venezuela, the country has been seeing mass migration that has astounded many. A late-2017 survey compiled by the group Consultores 21 discovered that more than four million Venezuelans have left the country since the start of the revolution in 1999, with another 51 percent of young adults still living there stating that they had hopes of also emigrating (La Patilla 2018).
This past week the Argentine peso fell 11% below the American dollar, the steepest daily fall it has suffered in the past 12 years. The official exchange rate has reached almost 8 pesos to 1 US dollar. Since the economic crisis that hit the nation in 2001, many Argentines have shown little faith in their own economy. Instead, they purchase foreign currency to save rather than saving their constantly depreciating pesos.
Last week, Argentina’s president Cristina Fernández de Kirchner faced a general strike from some of the largest unions of the country. Most businesses and services throughout the country were closed including transportation, hospitals, schools, and restaurants.1 With many taxi and bus drivers on strike, those who did not participate could not go to work for the day. Picketers blocked off roads, preventing travel throughout the capital. In other cities throughout the country, such as Córdoba, smaller scale strikes had similar effects.
On Tuesday, Brazil’s President Dilma Rousseff pled for her cabinet to embrace fiscal tightening and further austerity measures aimed to conquer Brazilian stagflation and “restore business confidence and growth” as she heads into her second term.1 She wants to bring down rapid inflation, about 6.5% annually, lower interest rates and stimulate spending to boost employment and raise incomes.2 In terms of tax policy, Rousseff wants to alleviate the burden on businesses, encourage private sector investment and boost export competitiveness.1