Macri economics | Monocle

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A year after president Mauricio Macri took office, Argentina is still waiting to reap the benefits. His electoral promises of thorough economic and political change and a quick recovery wooed voters who wanted a fresh start after 12 consecutive years of Cristina Fernández de Kirchner and her late husband and predecessor Nestor Kirchner. But economic issues inherited from the previous administration will not disappear quickly and Macri’s hands are tied: the country is split in two and he does not have a majority in Congress. In the past, economic problems fuelled deep political crises but for now the government is watching carefully to avoid popular upset.

Poverty is a challenge as the administration tries to implement austerity measures to cut down the fiscal deficit; meanwhile inflation is eating up salaries as prices go up. Analysts disagree as to when things will look up and uncertainty reigns – but it is not all doom and gloom. The country’s resilience and inventiveness is high and, judging from the vibrant cultural scene and nightlife in Buenos Aires, there is hope that things will work out one way or another.

Then there’s the start-up world: against the odds, a highly educated population has created a competitive environment for technology firms. The potential is as big as the country’s plains.

Leader's performance

Is Mauricio Macri a down-to-earth businessman who will put Argentina’s economy back on track or is he governing to tend to the elite’s interests? Opinions remain polarised as the right-leaning president enters his second year in office. Son of one of the country’s richest businessmen, he presided over Boca Juniors football club and the city of Buenos Aires before entering the Pink House – and his appointment broke with the tradition of having a lawyer as president.

“After years of populist leaders, his best quality is his low profile,” says political consultant Analia del Franco. But his closeness to the business world and his appearance in the Panama Papers leaks have fuelled criticism by political enemies.

Foreign policy

Macri’s first move was to pay up a small group of disgruntled creditors from the 2001 default which had cut Argentina off from international markets; he also stood up to Venezuela. Foreign affairs minister Susana Malcorra was key to this makeover; she is Ban Ki-moon’s former chief of staff. She has sought a rapprochement with the UK – without giving up the demand of sovereignty over the Falklands. She also successfully lobbied to host the 2018 G20 meeting.

Relations with the US also seem safe; Macri had openly supported Hillary Clinton but was quick in picking up the phone to congratulate Donald Trump. The two businessmen know each other from a 1980s property deal in New York that never took off.

State of the economy

Macri inherited an economy in disarray: a rampant black market caused by currency controls, high inflation, subsidised energy prices and a huge fiscal deficit. His promise of an overhaul made him a darling of international markets but unemployment has risen, domestic demand has fallen and the country’s international debt has risen.

Several foreign firms have promised investment but little has materialised. The government projects 3.5 per cent growth for 2017 but some economists are sceptical. “International trade is slow; Brazil has stopped and China is growing slowly,” says economist Mercedes D’Alessandro. “You need millions in productive investments to revert the situation and we don’t know where they’ll come from.”

View from Argentina

Fausto Spotorno, chief economist, Orlando J Ferreres consultancy
“This is a new government so you can’t ask them to be too efficient, especially because they inherited a big bundle of issues from the previous administrations. Right now Argentina has very good intentions and the right ideas but difficulty in executing them.”

Lorena Moscovich, political scientist
“It is a play of light and shadow. The challenge for the government is to carry out changes to modernise and create a more orderly and transparent management, while at the same time keeping up the social gains that were achieved throughout the past decade.”

Reynaldo Sietecase, independent journalist
“It is difficult to analyse this administration without seeing what came before. The previous model ran out of juice because of its contradictions and economic distortions. There has been a change of direction under the new administration: in foreign relations, the way of thinking about the state, the openness of the markets and the idea of having more efficiency in the state.”

Soft-power credentials

Home to football legends Diego Maradona and Lionel Messi, Argentina is a breeding ground for talented footballers. Argentina is second only to Brazil when it comes to exporting them, with 929 players abroad. Messi is the world’s second-highest paid athlete, with Sergio Agüero and Angel Di Maria ranking among the top 20.

Thanks to its public-education system and creative mindset, Argentina is the top country in Latin America when it comes to “unicorns”: technology start-ups valued at more than $1bn. They include e-commerce website MercadoLibre and Globant, which develops software for big companies in the US and UK.

The pope
Argentine Pope Francis is the first Latin American to lead the Roman Catholic Church. Since taking up the post in 2013 he has surprised many with his stance on social justice and his efforts to tackle corruption within the Vatican. He is so popular that his image can be seen alongside those of Che Guevara, Evita, Maradona and Messi in the touristy Caminito in La Boca.

What needs fixing

The inequality gap is visible, with shanty towns growing. The Macri administration needs to act quickly to implement long-term policies to tackle the issue at its root and not create growth at the expense of the poorest.

No matter how corrupt a politician you are, in Argentina the chances are that you won’t be prosecuted until you leave power; Fernández de Kirchner is the most recent example. The lack of an independent justice system doesn’t help.

Gender inequality
More needs to be done to fight a machista culture. A recent paper estimated that if women here were given the same work opportunities as men, GDP would increase.


The economy is the biggest concern. Has Argentina learned enough from its past to grow without leaving a third of the country behind? Macri and his advisers have the chance to lift millions out of poverty without ransacking the state’s coffers but they have to look beyond the vibrant cafés of Buenos Aires and get in touch with reality.

Grade: D+

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