Argentina's economic troubles are getting progressively worse. Labor problems stemming from inflation are putting increasing pressure on the government, whose policies have put it on the defensive
abroad and domestically.
WSJ: - The protesters took over the field early Thursday, destroyed crucial equipment and jeopardized the flow of gas to untold numbers of people in Argentina, Pan American had said in a previous statement Friday.
The end of the protest will come as a big relief to both Pan American and Argentine President Cristina Kirchner, who has been struggling to deal with dissatisfied union members across the country.
Rampant inflation has curbed purchasing power, but the Kirchner administration has pressured labor to delay signing agreements to raise wages, angering rank and file union members.
The government is actually threatening independent economists against publishing realistic inflation numbers, which are thought to be dramatically higher than the official 10%. Some estimates are putting it above 25% or even higher. With this rate of devaluation, the
mistrust of the peso is now so strong that buying of US dollars has reached a fevered pitch in the streets. Dollar now trades at some 30% premium to the official exchange rate.
AFP: - Argentines are on edge since the government imposed draconian measures to control money changers, measures which have complicated their compulsive buying of dollars which, alongside football, is a national pass-time.
So-called cellars, the few places where US dollars can still be illegally bought, have sprung up in the capital, but the greenback in these places is now sold at a premium -- up to six pesos. The official exchange rate is 4.5.
The vendors lining Florida street in the city center are constantly at risk of being caught by policemen, who have dogs trained to sniff out dollars.
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Dollar fever rose when President Cristina Kirchner opted to impose radical controls on currency exchanges and curb imports to protect $46 billion in reserves and a $10-billion trade surplus.
This uncertainty is damaging domestic investment, while foreign investment has collapsed. The latest economic reports from last week are dismal, with industrial production dropping 4.6% YOY vs. the average expectation of 1%. And with Argentina's key customer Brazil slowing as well, there is little chance of a rebound.
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| Argentina Industrial Production (YOY) |
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