#todayinsight: Milei is struggling between inflation and recession while is under pressure from his nation

Just recently, Javier Milei and the government of Argentina, could convince the congress to pass two important laws. These laws would enable the government to continue its reforms.  One law gives the president emergency powers, privatizes a number of state-owned businesses, and offers significant incentives to prospective foreign investors. The other seeks to generate much-needed tax income. The Senate approved them both during an overnight debate that lasted more than 20 hours. The vice president had to break the tie in the first vote because it was so close. 

While the session was going on in the senate, there was violence in the nearby streets. The riot police manned barricades as protesters surged forward. The government authorities referred to the protests as an attempted “coup.” Things were almost as tense within the Senate. Sen. Some senators insisted that the session end because of the turmoil outside, but he was reprimanded. Words of insults flew. President Javier Milei was described as “mentally ill” by opposition lawmaker Cristina López.

Anyway, both laws have passed the senate and now Mr. Milei has the power to continue the attempts. The inflation has been decreasing, recent readings indicate that monthly inflation has come down to as low as 5 %, although it is high according to global standards, it is a very low reading compared to Argentina’s long history of raging inflation. 

Concerns about the recession, which is becoming worse, are growing among voters. In April, construction activity decreased 37% on a year over year basis. The industrial production decreased by 17%. Analysts predict that in June, inflation will increase again due to growing salaries and the removal of energy price regulations.

Mr. Milei’s best chance of softening legislative obstinacy is to gain popularity. His approval rating is still far higher than 50%. Considering Argentina’s severe economic suffering, that is astounding. Given the state of the economy, it’s unclear how long Mr. Milei will continue to have widespread support.

 Source: Economist

Image Credit: AP