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Questions about Inflation in Argentina - Coggle Diagram
Questions about Inflation in Argentina
Data
What is the inflation rate?
DEC: 211.40%
What is the Gini Coefficient?
42.3
Greater Gini Index means Greater Income Inequality
Cash Rate
107.73%
borrowing would become more expensive
Exchange Rate
1 ARS = 0.00120543 USD
Decrease During 1 Year
suppressing investment, and thus negatively impacting the exchange rate
in a bid to bring down triple-digit inflation and encourage people to keep savings in the local peso currency despite rapid depreciation
What percentage of GDP does government spending represent in Argentina?
15.4%
Controlling the inflation
Interest Rate
133%
High Interest Rate will curb spending and reduce inflationary pressures
What are some factors that makes the inflation?
Plummeting peso
Drought
the loss of soy, corn, and wheat could cost farmers $14 billion
Debt
Luis Caputo(Minister of economy of Argentina):
the measures are necessary to cut the fiscal deficit he believes is the cause of the country’s economic problems
Rolling recessions
The GDP shrink every year which increase the gap between the poor and rich people
High Interest Rate
Debt
Rolling Debt Crisis
(ongoing difficulties in managing its debt obligations)
Due to the debt crisis, the government finds it challenging to borrow money from external sources, such as banks, investors, or other countries.
The Government ask CB to make more money
By increasing the money supply without a corresponding increase in the production of goods and services
Government Actions
What actions does the Government take to reduce the prices?
cuts to energy and transportation subsidies
Reducing aid to provincial governments
Raising some taxes
reduce the size of the government
cutting some state jobs
canceling tenders of any public works projects
Slashing the currency’s value in half
Effects
Long term
Making most goods nearly unobtainable + Unable to get enough food to survive
Debt Accumulation
406,948.1 USD
Higher Debt and Inflation will lead to the country may not be able to pay back the debt
Short term
Income Redistribution
Those with fixed incomes, such as pensioners and low-wage workers, may experience a decline in their purchasing power
while individuals with assets that appreciate with inflation, such as real estate or stocks, will benefit
raising interest rates
curb spending and reduce inflationary pressures
increase the cost of borrowing for businesses and consumers, affecting investment and consumption
Reduced Purchasing Power since the price is going up a lot