Joseph Stiglitz: Argentina's COVID Miracle

Unlike the United States, which could spend one-quarter of its GDP protecting its economy from the COVID-19 fallout, Argentina entered the pandemic with the deck stacked against it.

Yet, thanks to the current government’s policies to strengthen the real economy, the country has been enjoying a remarkable recovery.

Argentina was already in a recession when the pandemic hit, owing to a large extent to former President Mauricio Macri’s economic mismanagement.

Everyone had seen this movie before: A right-wing, business-friendly government had won the confidence of international financial markets, which duly poured in money.

Then, when things went awry – as many observers had anticipated – the IMF stepped in in 2018 with its largest-ever rescue package: a $57 billion program, of which $44 billion was quickly dispersed in what many saw as a naked attempt by the IMF, under pressure from U.S. President Donald Trump, to sustain a right-wing government.

Given the mess that Argentine President Alberto Fernández inherited in late 2019, it appears to have achieved an economic miracle.

From the third quarter of 2020 to the third quarter of 2021, GDP growth reached 11.9%, and is now estimated to have been 10% for 2021 (compared to 4.5% projections) – while employment and investment have recovered to levels above those when Fernández took office.

The country’s public finances have also improved, and there has been significant growth in exports.

At: https://www.project-syndicate.org/commentary/argentina-covid-economic-miracle-by-joseph-e-stiglitz-2022-01

Nobel Laureate Joseph Stiglitz and Argentine Economy Minister Martín Guzmán - his former student.

Professor Stiglitz lauded Argentina's against-all-odds economic recovery - with real GDP now around 3% higher than the same time in 2019, and budget deficits at a modest 4% of GDP.

He noted, however, that the $44 billion bailout debt inherited from right-wing President Mauricio Macri - reportedly granted over the IMF's own objections at Donald Trump's behest - would be difficult to repay even under a 10-year agreement.