Saturday, April 4, 2020

OP-ED | 01-01-2019 09:45

Editorial: Goodbye to 2018 – and hello to 2019

The change of economic course in 2018 was so extreme that any forecast for 2019 seems extremely rash.

Even with only a few dozen hours left in the year, it may still be too early to close the book on 2018. Hard as it might be to find any positive economic indicators, the expression “always darkest before the dawn” comes to mind – a dawn in which Argentina finally awoke to reality. But that very much remains to be seen.

The 2018 calendar began brightly enough in its first third with positive political and economic momentum, continuing from the government’s midterm victory and economic growth of 2017 – so much so that President Mauricio Macri could indulge a largely apolitical post-modern agenda in his March state-of-the-nation address, including a half-hearted and ultimately unsuccessful proposal to legalise abortion. The year lost its way in early May with the dollar crisis (an occasion too complex to explain here) leading to a constant spiral of devaluation and inflation (or rather stagflation), followed within days by turning to the International Monetary Fund (IMF) as almost the first rather than last resort and eventually securing an enhanced package of US$56 billion roughly equivalent to current exports (hard-hit by a cruelly unlucky summer drought).

Yet the loss of momentum was far more economic than political and the reason for that can be found in one of the year’s biggest news stories – the ‘cuadernos’ (“notebooks”) exposés of Kirchnerite graft. While the effect on public opinion was more subliminal than apparent, it also prevented ex-president Cristina Fernández de Kirchner from translating her runaway opinion poll lead among Peronist leaders into any real opposition unity with no significant shifts in Argentina’s polarised politics throughout the year.

This thumbnail sketch inevitably skips some of the year’s biggest stories (some i n v o l v i n g f o o t b a l l , such as the disgraceful i n c i d e n t s surrounding Boca-River Libertadores Cup final or a disappointing World Cup in Russia, the more positive Youth Olympics, the abortion debate, the surprise discovery of the missing ARA San Juan submarine). “Darkest before the dawn” – could the G20 World Leaders Summit returning Argentina to a more complex world, from which all too many countries are backing away, be that dawn? Questions which cannot be answered in the next few dozen hours.

Any preview of an electoral year inevitably revolves around that lowest common denominator – and all the more so this year with the nation at a crossroads. The situation has changed enormously from this time last year when the immediate aftermath of the Cambiemos (Let’s Change) ruling coalition’s midterm triumph seemed to leave President Mauricio Macri p e r f e c t l y p o i s e d t o quote Ge - neral Juan D o m i n g o Perón’s famous phrase: “It’s not that we are so good but the others are worse” against the hopelessly d i v i d e d fragments of the Peronist movement. That political landscape has not changed but no longer defines the electoral outcome this October, which now seems to hinge on that famous quote slightly misattributed to Bill Clinton: “It’s the economy, stupid.”

Everything seems to depend on the persistence of a stagflation which has already lasted over six months. The extreme step of resorting to the International Monetary Fund (IMF) should avert any foreign debt crisis in this electoral year – especially with over half the US$56-billion package up for delivery in 2019 – but at the price of certain policy commitments. These policies, of a money supply freeze and high interest rates, may or may not end inflation in time (especially since the devaluation of this dying year doubled the pace of soaring prices) but they guarantee recession – fiscally expansive policies are uniquely shunned in an electoral year with negative growth already inked into the 2019 budget. Yet voter perceptions may be otherwise by next spring, simply because even a tough year could hardly be worse than 2018 (least of all the harvest). The change of economic course in 2018 was so extreme that any forecast for 2019 seems extremely rash.

Of the 365 days lying ahead of us, no less than 268 will be absorbed by the electoral calendar between the first local voting and December’s presidential inauguration – any new president would then only have three weeks left in the year (even if Macri made some major moves in that short spell, ending capital controls as well as most export duties until recently). Nothing wrong with elections as the essence of democracy – the harm lies in their becoming ends in themselves if we cannot look beyond them.

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