2023-05-13 00:27:23
Argentine Elections and the United States Dollar
As we've reported before, in a just a couple of months Argentina is going to have it's mandatory primary elections (PASO) then it's actual presidential elections with a second row of voting basically guaranteed should any candidate fail to obtain at least 51% of the votes on the first election, which is basically guaranteed in the current political climate.
However something which I have noticed no international commentator mention was what the impact of Argentina adopting the US dollar either by directly doing so (Like Ecuador did) or by, as the libertarian presidential candidate
Javier Milei proposes, a free bench system which would allow free choice in currency usage (which in argentina means a defacto dollarization) would be, in this post I'll attempt to show the magnitude of such decision in numerical terms:
With a Gross Domestic Product (GDP) of approximately US$610 billion, Argentina is the second largest economy in South America, third in all of Latin America and has a population of 45.8 million people.
Argentina has vast natural resources in energy and agriculture. Within its 2.8 million square kilometers of territory, it is endowed with extraordinary fertile lands, gas, and lithium reserves, and has great potential for renewable energy. Argentina is a leading food producer and exporter with large-scale agricultural and livestock industries, and growing gas and oil exports,
In addition, it has significant opportunities in some manufacturing subsectors, and highly innovative services in high tech industries.
After the pandemic, economic activity has recovered faster than expected, with an increase of 10.4% of GDP in 2021 and 5.2% in 2022, after a fall of 9.9% in 2020 in the context of the crisis unleashed by COVID-19. However, economic activity has contracted in the last 4 months of 2022, affected by strict import controls to sustain the accumulation of reserves, while a historic drought limits growth in 2023. Inflation remains high, and as of February 2023, it exceeded a 100% per year. The economy continues to show macroeconomic imbalances that limit the sustainability of economic growth.
Now these are all general statistics, but it helps to put the country in context as despite undergoing an
insane inflation of 108% interanual it still continues as a strong industrial powerhouse and a highly capable intelligent White workforce that despite the macroeconomic insanity is still able to not just survive but grow.
Now it's important to note that because the current macroeconomic insanity has led Argentina to a financial collapse of it's currency the peso with an "official" rate of
1 USD = 237 AR$ and the real black market rate (the blue dollar) of
1 USD = 474 AR$, this collapse has massively boasted the chances the most finacial extreme candidate
Javier Milei to become the next Argentine president under an open proposal to dollarize the economy, this would effectively not just massively increase the demand of the USD by the 45 million Argentines now utilizing greenbacks but also by making Argentina a defacto USD exporter to the rest of South America similar how trade happens with Ecuador in a much smaller scale as the USD internationally is a sought after commodity as well, the impact of this would be enough to counter all the bank bailouts that the federal goverment paid for during 2022 in a single year, to call it massive would be an understatement.
One certainly has to wonder if the US embassy is softly backing Milei having realized just how beneficial this would prove for them.
4.3K viewsFRANCISCVS, 21:27
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