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One Year of Macri: When Politics Holds the Economy Together

10 0 17

An exclusive English translation of the article ‘Cuando la política sostiene la economía‘ by José Natanson for El Diplo.

President Mauricio Macri dances for the crowds on Plaza de Mayo during his inauguration ceremony (Photo: Patricio Murphy)

We’ll start the review of President Mauricio Macri’s first year looking at politics. Coming with the weakest parliamentary representation since the return to democracy, the government avoided the threat of a legislative paralysis by creating coalitions that supported controversial laws such as the agreement to pay bond holdouts or the tax amnesty. The opposition, with a formal majority but politically splintered, was only able to impose one major initiative, the anti-layoff law, which the president vetoed seemingly without paying as big a political cost as when Cristina Fernández de Kirchner vetoed the 82% pension bill in 2010. In the same vein, the deteriorating social climate has not led to the anticipated general strike from major unions or mobilisations from social groups capable of altering the status quo.

In other words, the diagnosis of ‘austerity without rebellion’ that we formulated two months ago remains in place, though the Macri administration still needs to get through December, Argentina’s dreaded month for governability. The tragedy of Cromañón (2004), the looting (2013), and the violence in Parque Indoamericano (2010) are reminders that since 2001, all Decembers threaten to be another 2001. President Macri knows this and, well-advised, acted in the only way possible: returning to the old trick of distributing resources such as the public-sector Christmas bonus, eliminating taxes on the medio Aguinaldo, and the social emergency initiative. In other words, ‘dipping into the till’, an expression used so often during the Kirchnerist but now mysteriously absent in the media today.

On the other hand, the economic balance is unfavourable, whichever way you look at it. GDP will fall by around 2% in 2016, matching the worst year for growth during the Kirchner era. Inflation will reach the highest level since 2002 and exports, measured in volumes, will both fall and become more concentrated in primary goods. The social impact is well known: a fall in purchasing power of around 5%, more poverty (32.2%) and more inequality (the Gini coefficient moved from 0.400 in 2015 to 0.417 in 2016).

On revising the economic year that is about to end, the impression is that after the initial round of shock therapy (removing export taxes, devaluation,........

© Argentina Independent