Argentina's inflation was estimated to be 55% in the past year, second only to Russia as being the highest in the world. However, compared to the rest of the world suffering inflation as a result of supply chain shocks due to the Ukraine war, Argentina's inflation is endemic to the nation. In the country's history, they have had inflation soaring to 3,000%. Locals have adopted approaches to make the best of their economy's bleak situation. Given that money no longer acts as a store of value, they use their pay-cheques as opposed to putting any money away in savings. They try to keep their money in USD as it is protected against inflation. Some even pay taxes late because their money will have less value, and given the level of corruption and lack of legislation, they are not afraid of any penalties for doing so. Another approach being used to take advantage of delaying payments, is paying in installments (even for essentials like groceries)- as interest on deferred payments is lower than inflation, and in some cases, no interest is charged. Most Americans are familiar with hoarding during crises (i.e the pandemic and the shortage of sanitizers and toilet paper), however, in Argentina, this is a daily practice as items will cost more within a month. Many people in Argentina have also had to cut back on their lifestyles and choices, some forced to give up meat since they can no longer afford it. Another interesting approach, and one that made headlines for Ukraine's government, is saving money in cryptocurrency. Citizens prefer the volatility of the cryptocurrency asset class to that of the Peso.
https://www.wsj.com/articles/inflation-got-you-down-at-least-you-dont-live-in-argentina-11650898676
I think the current state of Argentina's economy is very concerning and could potentially get as bad as Venezuela's economic crisis. If something is not done soon to combat the hyperinflation they are currently experiencing it could cripple their economy for years.
ReplyDeleteIt seems like the average Argentinian is handling the high inflation as well as they can. Normally cryptocurrency isn't something I would recommend as a safe investment, but if inflation has progressed enough that cryptocurrencies are legitimately more stable than the Peso, then this is a good example of effective saving strategies that no one would have thought of 15 years ago.
ReplyDeleteI read an article that described how people in Argentina manage their salary. Whenever people receive a salary, they but groceries and other needs. The rest of the money, the immediately convert to USD. It is believed that Argentina has the most 100 USD bills in the world,
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