Argentina turned away from monetarism

After Argentinian President Mauricio Macri has conceded defeat in the primary elections, the national currency fell sharply by 30%, and the stock market fell by 38%. Investors see the Fernandez/Kirchner duo as a riskier prospect than free-markets advocate Macri, RISS expert Mikhail Belyaev said. "In fact, it is the collapse of the financial system of the country. According to various estimates, Argentina takes approximately the 25th place in the world GDP ranking, and it is in the list of the world's top ten largest economies that are measured in purchasing power parity terms," he added.

Presidential candidate Alberto Fernandez and his running mate former President Cristina Fernandez de Kirchner, who scored a win in the Argentina primaries, are supporters of the state participation in the economy development and strict control over currency. This often scares investors. Kirschner's actions in the economy during her presidency did not bring any breakthrough results and were contrary to the concept of a free market, which now dominates the world.

Makri in his presidential campaign proposed to liberalize the economy. Some people expected that market forces would bring prosperity to the country, or at least raise living standards. But as a result, the inflation rate in the country reached 55-70%. Argentina’s central bank has stepped up efforts to prevent inflation by increasing discount rates to 60-70%. President Makri’s policy failed.

The collapse of Argentina's financial market has affected the Turkish lira and the South African rand, as these currencies are closely linked to the financial market of this country. Brazil is also concerned about the flow of refugees from a neighbouring state in crisis.

"The theory of the Chicago school of Economics, which suggests the establishment of financial flows that automatically improves the situation in the manufacturing sector, is successful only when developing economies are more or less balanced. But now we live in a completely different world, where the direct link between financial flows and the material sphere is broken. That is why Makri’s soft financial methods failed. We see that China and South Korea, which use a tougher approach to the economy, have succeeded much better than countries tending to monetarism," М.Belyaev underscored.

economy Argentina