Argentina is facing a crucial presidential election on October 22 amidst its sixth recession in ten years, and the situation is escalating rapidly.
Inflation is high, nearly reaching a rate of 140%. This difficult financial climate is causing some companies to stop their sales.
They are worried about a drop in the value of the Argentine peso, the national currency.
The Central Bank of Argentina is in a tough spot. Its reserves are low. The unstable currency puts extra pressure on whoever wins the election.
They will have to find a way to stabilize the nation’s finances.
Two people are leading in the election polls. One is Sergio Massa, the current leftist Economy Minister.
The other is Javier Milei, a libertarian candidate.
Massa recently reduced the value of the peso by 18% after some primary elections. He has also frozen the official exchange rate.
This has led people to think another drop in the peso’s value could happen after the main election.
Milei is telling people to stop saving in pesos. He plans to switch the country to using U.S. dollars.
Carlos Melconian, an advisor to Patricia Bullrich, another candidate, made a prediction. He said the peso might fall to 500 per U.S. dollar from its current rate of 350.
The government quickly responded. They said a fall in the peso’s value is not likely to happen soon.
Many businesses are feeling the impact of this uncertainty. Juan Pablo Rudoni, who runs a construction company, said it’s hard to finalize purchases.
Suppliers are canceling orders. He thinks the week after the election will also be tough.
General Motors, a big car company, has even stopped making cars in Argentina for now. They can’t get the parts they need.
Heading Towards Very High Inflation
A factory near Buenos Aires has also been affected. It produces essential items like paper towels and toilet paper.
The factory has told small stores that it will not sell these items for a week after the election.
Financial troubles are causing concern across the country. Even a large amount of money, $500 million, got stuck at the airport for three days.
Local banks became worried when this happened. Experts say these events could be warning signs.
They might mean Argentina is heading towards very high inflation. The election’s outcome will play a big role in what happens next.