Poverty in Argentina reached its highest level since the aftermath of the 2001 financial crisis in the first half of the year, as President Javier Milei unleashed a shock therapy programme to put an already reeling economy back on its feet.
About 52.9 percent of Argentines were mired below the poverty line in the first half of the year, up from 41.7 percent in the second half of 2023, according to government data published Thursday. It’s the result of an aggressive cost-cutting exercise meant to tame inflation that the government warns would have continued spiraling higher in its absence.
“This is a number that, surely, will reflect the crude reality that Argentine society is going through as a consequence of the populism that has put Argentina through so many years of disgrace and devastation,” Presidential Spokesperson Manuel Adorni said in a preview of the data at a press briefing earlier Thursday.
Annual inflation nearing 237 percent drove the increase in Argentina’s poverty rate, which is calculated using a basket of household goods and average wages. The proportion of people who can’t make ends meet has now more than doubled since the second half of 2017.
Yearly consumer price gains are down from a peak of 289 percent in April but still far higher than the 18 percent Milei is boldly predicting by December 2025. Monthly inflation has fallen to about four percent after hitting nearly 26 percent in December, when the President liberated price controls on everything from milk to phone bills, sharply devalued the currency and let price gains outpace pensions and public wages in the first months of the year.
Though mired in its sixth recession in a decade, South America’s second-biggest economy is showing incipient signs of recovery, with wage growth edging above inflation for three straight months as well as recent gains in both consumer spending and manufacturing. Economic activity rose 1.7 percent in July from a month earlier, led by agriculture and mining.
Opposition to the government’s austerity push, however, risks jeopardizing the consistent budget surpluses that have helped put a lid on inflation. This month, Milei vetoed a bill that would have significantly raised spending on pensions, triggering violent protests outside congress. Next Wednesday, public universities are threatening more public unrest and a 24-hour strike over the libertarian’s promised veto of their expanded budget.
Evidence of growing hardship is rampant. People begging outside grocery stores, digging through the trash and ringing doorbells for used clothes have become mainstays in the capital of Buenos Aires. The government has increased funding for both the country’s main child support and food stamp programmes, Adorni said.
by Manuela Tobias, Bloomberg
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