The complex awakening from the Kirchnerist "Matrix"
Leaving aside Mauricio Macri’s four-year mandate, Argentina has been immersed over the last 23 years in an economic environment defined by taxing state interventions into basic individual economic decisions. Repeatedly, the “Kirchnerist” governments tackled macroeconomic imbalances by applying micro economic measures that only temporarily hid the macro distortions but did not solve them. Such economic interventions were carried out under the pretext of protecting the more vulnerable of society. But the actual consequence has been a stagnant economy with a revival of chronic inflation from 2008 onward.
Like Morpheus in movie "The Matrix" offering Neo to awaken from an artificial dream, Milei has convinced a majority of voters to wake up from the Kirchnerist cycle of extended stagnation. But as in the movie, the process of waking up is not pain-free, the actual reality is not necessarily rosy, and not all of those who were given the option to wake up might want to stay awake.
For now, Milei has in his favor his political capital after winning the presidential elections. However, he faces the economic hardship and political resistance of unplugging an inefficient welfare state to which many voters (and politicians) have become accustomed.
While we await Milei’s opening speech to Congress tomorrow (Friday), we review in this report the first macroeconomic indicators of the new government, asking ourselves some preliminary questions to probe the potential upsides and downsides in the government's drastic attempt to "awaken" Argentina’s society.
Now read on...
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