It wasn’t meant to be like this. Mauricio Macri’s election to the Argentine presidency in 2015 was supposed to usher in an end to economic and political crises. International investors welcomed moves to float the peso and eliminate export capital controls.
Last year, the International Monetary Fund (IMF) increased the size of its bailout to $56.3bn. As with all IMF loans, Argentina had to agree to cut pension benefits and public utility subsidies.
Not surprisingly, Macri’s popularity has fallen as so many people depended on those programmes, which had helped the country recover from a 2002 economic crisis.
That austerity has crippled the poorest in society. The economy is in recession.
Macri pledged to bring inflation down to single digits, but inflation stands at 54.7 percent.
What’s behind the spike in inflation?
The currency has fallen 18 percent this year alone. Now, you would think a falling currency would be useful for exporters. But the cost of imported goods has risen, and that has been passed on to consumers.
In a surprise move, former President Cristina Kirchner announced plans to run as vice president with one of her former ministers taking on the role of presidential hopeful. That is much to the relief of overseas investors.
“For Macri, it’s really an uphill struggle,” explains Jimena Blanco, head of Latin America Research at Verisk Maplecroft, a risk analysis and forecasting company. “There’s a structural lack of confidence in Argentina, not just inside Argentina, but outside Argentina. When you talk about Macri doing the right things, there is a lot of debate about whether he did that and the pace at which he did that and also whether he went far enough, soon enough.”
According to Blanco, “the key area of criticism is late 2017 when the government changed its inflation goals and didn’t really explain why, when it went early to the markets to borrow ahead of schedule, and of course we saw in April why when the peso went on a rapid depreciation and then that happened again later in September. So it’s really a difficult situation for Macri, especially heading into a crucial election in October.”
“For Argentina, economic and political volatility feed into each other,” says Blanco. “It makes the current political landscape extremely uncertain. Anyone who says they expected Cristina Kirchner to announce her candidacy as VP rather than presidential candidacy would probably be lying. It took the political arena by surprise last weekend. We can expect anything between now and the 22 of June when candidacies are announced.”
Should Facebook be broken up?
When a founder of Facebook calls for the social media network to be broken up, you really do need to sit up and take notice. The social media giant has been at the centre of a storm over the access to data of its users – most notably by Cambridge Analytica. The British political consultancy harvested data of millions of Facebook users without their consent while working with Donald Trump’s 2016 presidential campaign.
In a financial filing, Facebook has said it expects to be fined up to $5bn by US regulators for that and many other transgressions. That’s a slap on the wrist for the social media giant that racked up $56bn in revenue in 2018.
So unconcerned are investors by the fine, the company’s share price has risen 40 percent this year alone, pushing the value of Facebook to $527bn.
Steve Bartlett, CEO of the global social media agency Social Chain, doesn’t believe Facebook should be broken up.
“The reason why you break up companies because usually they’re a fundamental and required product for a civilisation and they have a monopoly over that space. And first and foremost you need to define what monopoly we’re claiming that Facebook has.”
“Social networking is a very broad topic and really you could consider social networking anything from iMessage to text messaging … When you look at Facebook’s business model, they make 99 percent of their revenue from advertising and they certainly, even on the internet, don’t have a monopoly over advertising. Google owns 32 percent of online advertising market so even Google is more of a monopoly per se than Facebook are.”
Also on this episode of Counting the Cost:
Pakistan IMF: Pakistan has agreed on a deal with the IMF to receive a $6bn loan. But under its terms, its currency will have to be devalued against the dollar, and electricity and gas prices will increase. That is likely to prove unpopular, as Kamal Hyder reports from Islamabad.
Venezuela gas: Venezuela has the world’s largest oil reserves, yet its people are scrambling to fill car tanks, as petrol supplies dry up. They have already faced chronic deficits in medicine, food and electricity. But harsh US economic sanctions, and mismanagement of the oil industry, have pushed the energy sector to crisis point, as Lucia Newman reports from the economic hub of Valencia in Venezuela.
Facial recognition: Automatic Facial Recognition (AFR) technology uses our unique facial dimensions to let us access bank accounts, go cashless in holiday resorts, and use automated border controls. But AFR can also track us, and invade our privacy, as Paul Brennan reports on the UK’s first legal challenge against the technology.
Source: Al Jazeera