Argentinians’ frustrations and hopes of life amid ‘shock therapy’
Published: Feb 20, 2024 03:53 PM
People protest austerity measures proposed by Argentina's President Javier Milei in La Matanza on the outskirts of Buenos Aires, Argentina, on January 17, 2024. Milei has announced economic measures in hopes of staving off hyperinflation.Photo:VCG

People protest austerity measures proposed by Argentina's President Javier Milei in La Matanza on the outskirts of Buenos Aires, Argentina, on January 17, 2024. Milei has announced economic measures in hopes of staving off hyperinflation.Photo:VCG

Editor's Note:

Over the last two months, the "shock therapy" implemented by the Milei government has had a tremendous impact on Argentine livelihoods and society. The working class has substituted beef with cheaper chicken on their dinner tables; the middle class has ceased dining out and started collecting discount coupons from newspapers; supermarket shelf stockers have had to frequently change price tags; and small business owners have lamented the increasing difficulty of doing business... Despite facing these challenges, and while some Argentines express concern that they do not know "what tomorrow will bring," another segment of the population remains confident in Milei's reforms. What is the reason behind this? The Global Times interviewed several Argentine citizens, getting their accounts of the changes experienced in their lives over the last two months and their expectations for Argentina's future.

Chicken for beef

Eduardo Perez, a trader in Argentina, told the Global Times that over the last two months, the prices of all essential goods, ranging from toilet paper, bread, and cooking oil to beef, pork, and flour, have been rapidly increasing. 

"Prices of various goods have risen by more than 50 to 100 percent, and even more. This has forced people to compare prices at different supermarkets one by one before placing orders, and they now only buy necessities," Perez said. 

Beef has always been the most consumed meat in Argentina, and has been so for decades. Argentina is even known as the "land of beef." A few years ago, when the Global Times interviewed locals in Argentina, some women casually said: "When I don't know what to cook for my family, I just grill beef," a nod to the deeply rooted dietary habits of the locals.

However, this situation seems to be changing. With the recent skyrocketing prices of beef, many families find it difficult to afford it, so they are changing their traditional dietary habits and opting for cheaper meats like chicken and pork, and some families are already down to eating only one meal a day due to the soaring food prices.

In an interview with the BBC, Oriana and Samir, a young couple in their early 20s living in Buenos Aires lamented over the current dilemma. 

"It's very difficult," Oriana told the Global Times. "You're constantly asking yourself - 'how am I going to make ends meet?' We're the country of beef, but we only eat chicken because it's cheaper."

Life for the middle class in Argentina is also tough. Gustavo Ng, who works as a writer for a publication in Buenos Aires, is a typical member of the Argentine middle class. He told the Global Times that in just two months since Milei took office, his family has changed many habits, including cutting down on dining expenses as the cost of dining out has increased by 40 to 80 percent.

"Now, when shopping with my family at the supermarket, we no longer choose the brands we used to, but 'downgrade' to buy brands of relatively poorer quality that are cheaper," he told the Global Times.

"We have also started to learn to collect discount coupons from newspapers and specifically look for supermarkets with discounts. My family is also stocking up on more food and cleaning products because prices are rising too fast," he said.

An Argentine housewife who frequently goes shopping told the Global Times that over the last two months, the prices of goods in supermarkets consistently changed, and changing price tags has even become an important task for supermarket staff.

In addition to the food price inflation, Argentines also have to bear the increase in public transportation costs. In January 2024, Buenos Aires subway fares rose, with a single-trip fare first rising from 80 pesos to 110 pesos. According to local authorities, this price will continue to increase to 125 pesos in February, an increase of more than 50 percent in two months.

"This has greatly increased the commuting costs for working-class people, and some people now even have difficulty going to work," Gustavo complained, noting that the increase in public transportation costs has the greatest impact on the poorest people and families caring for the elderly and children.

Businesses dilemma 

The economic situation in Argentina is a source of increased operational difficulties for businesses and for workers to obtain reasonable incomes. Perez told the Global Times that currently, the average monthly salary in Argentina is less than $200. "For example, a clerical secretary can earn around $150 to $220 a month, while a building security guard earns between $130 and $200 per month. This figure is rapidly decreasing due to currency devaluation."

According to local media reports, in January this year, Argentina's current minimum monthly wage was 156,000 pesos, equivalent to only $156 according to black market exchange rates at the time, ranking second to last among the 18 major Latin American countries surveyed. However, in December 2023, Argentina's 

"poverty line" was set at a monthly income of 240,000 pesos. This means that the minimum wage now falls far short of meeting basic living needs. In sharp contrast, eight years ago, Argentina's minimum wage level was among the highest in the region.

For business owners, the rising costs of raw materials and other expenses are a heavy burden, with some enterprises facing the dilemma of layoffs or even closure. According to a BBC report, Claudio Perez, a successful Argentine businessman who once owned 12 supermarkets and candy stores, now only has two left due to the sharp decline in his income caused by skyrocketing operating costs and the collapse of customer income. 

According to Gustavo, state-owned enterprises in Argentina have already undergone massive layoffs. The government has announced that there will also be large-scale layoffs in government departments. It is also widely expected that many private enterprises will also have to lay off employees in the coming months due to the inability to sustain operations. Some of his friends have already lost their jobs, and he himself has lost a part-time job. "Due to the almost zero purchasing power of many Argentines, businesses that sell to the domestic market are greatly affected."

Against this backdrop, on January 24, Argentina witnessed a large-scale strike. Amid the economic turmoil, the polarization of wealth in Argentina is becoming more severe: Ordinary people are paid in Argentine pesos and lack the ability or avenues to obtain dollars, thus having to bear the brunt of soaring prices; however, the wealthy have significant dollar assets and dollar savings, and since the Argentine peso is also depreciating, many goods priced in dollars have not become more expensive, but have become sometimes even cheaper than in neighboring countries, and everything remains unchanged for the rich, read media reports.

What is ahead?

Shortly after taking office, Argentina's Economy Minister Luis Caputo announced a series of economic policies aimed at reducing the fiscal deficit and controlling inflation. Milei's government attributed the root cause of Argentina's current economic problems to an excessively large fiscal deficit. The new government promised to introduce a series of policies to narrow the fiscal deficit, including reducing the number of federal ministries from 18 to nine, cutting subsidies for energy and transportation, and halting the bidding for new public works projects.

The policy that the new government aims to adopt is not without merit: Publicly available data shows that Argentina's fiscal expenditure far exceeds its income, and the country's debt level is staggering. Argentina owes over $44 billion to the International Monetary Fund, making it the largest single debtor country to the organization.

One of the most closely watched reform measures that the new government has since adopted is allowing a significant devaluation of the Argentine peso and making comprehensive dollarization of the economy its medium-term goal, although it has yet to announce a roadmap for dollarization. However, a report by Morgan Stanley suggests that Argentina's productivity levels, economic vitality, foreign exchange reserves, and savings rates do not meet the requirements for dollarization.

 "I am extremely pessimistic about the future of Argentina," Gustavo told the Global Times. "If the cost of keeping the Argentine economy barely running is the well-being and dignity of millions of Argentines, then this is a burden that Argentines cannot bear. Cutting funding for science, culture, and industry will also undermine the prospects for long-term development. Historically, Argentina has experienced similar moments, all leading to massive protests and social unrest." 

"I don't know what will happen tomorrow. Nobody knows," bemoaned another resident of Buenos Aires who preferred to remain anonymous.

Despite this, not all Argentines suffering from the economic crisis oppose the new government. Perez is one of Milei's supporters. 

"Argentina's current situation is the result of years of accumulated wrong policies, not caused by the current government, which has been in office for only a few days," he explained to the Global Times. He agrees with the government's assertion that in recent years, Argentina's public expenditure has been excessive, so he supports the Milei government's measures to reduce ministries and achieve fiscal balance.

"We have to give the new government time, and then we will see growth," Perez told the Global Times. 

Despite being engaged in trade with China himself, he is not worried about Milei's previous remarks about "cutting ties with China" or similar statements. "Despite the Milei government appearing more pro-US, Argentina cannot stop its economic and trade relations with China. This is an obvious fact," he said. 

According to a January survey by the pollster Escenarios cited by Al Jazeera, 55 percent of respondents believed Milei's reform measures were necessary to improve the economy. 

The report quotes political analysts as saying that this figure is mainly due to the propaganda efforts of the new government, which argues that Argentina's economic woes are the result of accumulated problems from the previous administration's policies. However, the survey also shows that most respondents believe that any significant policy changes should be implemented gradually, rather than all at once.

Milei warned in his inaugural speech that Argentina's situation would worsen before it improved. "He was right," said Al Jazeera, but if the situation does not improve after some time, opposition to the Milei government in Argentina may intensify, even leading to its inability to complete its term, and the new government may find itself "in the eye of the storm" within just a few months.

"Let's give him a year," Al Jazeera quoted an Argentine voter as saying. "And if, for a year, all of us have to eat beans, we'll eat beans."