Ethereum co-founder Vitalik Buterin wrote on Twitter: 'ARS/USD is at the exact same level as it was a year ago. For a currency that seemed to be on an unstoppable path of hyperinflation, this is quite an impressive turnaround. Inflation rates have also been rapidly declining in recent months.'
Argentina's currency ARS has suffered from inflation for the past few years, attracting international attention and drawing loud criticism from the cryptocurrency community regarding central bank monetary policies, with hopes that cryptocurrency could change the local value storage methods. However, under the adjustment of government policies, the vicious phenomenon of inflation is undergoing a transformation.
Argentina's inflation has dropped to a four-year low, and economic light is beginning to show.
According to data released by Argentina's National Institute of Statistics and Censuses (INDEC) on Wednesday, Argentina's monthly inflation rate in November dropped to 2.4%, the lowest level in four years. This result has ignited hope among local residents suffering from economic crises, as they expect the toughest times may have passed.
This data not only fell short of market expectations of 2.8% but also improved from 2.7% in October. Meanwhile, the annual inflation rate decreased from 193% to 166%. These changes have led many observers to believe that Argentina's economy may be gradually recovering from the depths.
How did Argentina get through the economic crisis?
Under the backdrop of Argentine President Javier Milei implementing tight fiscal policies, Argentina is struggling to cope with severe economic challenges.
The Milei government is cutting public spending to improve the fiscal deficit and is planning to lower the monthly depreciation rate of the peso from the current 2% to 1%. Economy Minister Luis Caputo stated that this inflation data is the lowest record since July 2020, representing a key step towards economic recovery. Although inflation remains high, having dropped from a peak of nearly 300% in April this year to the current 166%, experts predict it may further decline to around 100% by the end of 2024.
The public's thoughts on the easing of inflation in Argentina are complex.
For ordinary people, the easing of inflation brings complex feelings. A teacher in Buenos Aires, Aida Segot, stated that her salary still cannot cover basic expenses. She said, 'I don't know much about inflation, but I know my salary runs out quickly. I used to make it to the 20th of each month, but now it's gone by the 12th.' However, Milei's approval ratings remain strong. Many people’s dissatisfaction with traditional political forces due to the price surges and economic distortions of the past few years still gives him a popular base.
According to official data, the prices of education-related goods and services rose sharply in November, along with rents, utility costs, and prices of tobacco and alcohol. However, the price increase of food and non-alcoholic beverages was the slowest, which is good news for local consumers.
Can Argentina's economy be revitalized?
Argentina is still experiencing severe economic difficulties, including nearly depleted foreign exchange reserves, capital controls, and a poverty rate of up to 50%. However, the decline in inflation indicates that Milei's austerity policies seem to be showing results. Whether the economy can further recover in the future still depends on how the government balances austerity measures with the needs of people's livelihoods.
In any case, many Argentinians choose to be patient with Milei. Respondents said, 'As long as we stick to this path, everything will be fine.'
(Argentine liberal Javier Milei was elected president and will implement economic shock therapy.)
This article titled 'Argentina's President Successfully Tackles Inflation! Inflation Rate Hits Four-Year Low, Vitalik Comments: An Impressive Turnaround' first appeared in Chain News ABMedia.
