Case Study: Macroeconomic Instability in Argentina

Argentina has faced persistent structural challenges, characterized by chronic fiscal deficits, currency depreciation, and volatile inflation. Following a period of external debt restructuring, the Argentine Peso depreciated significantly against the US dollar, leading to a surge in the price of imported intermediate goods and consumer essentials. Real wages struggled to keep pace with the rising cost of living, leading to widespread erosion of purchasing power. Although the central bank raised nominal interest rates in an attempt to anchor inflation expectations, economic activity contracted. Unemployment and underemployment both rose, and many households had to reduce consumption of non-essential items as basic foodstuffs and utility prices continued to climb.

Table 1: Annual Consumer Price Inflation in Argentina (2016–2021)