Argentina and Bolivia – A Tale Of Two Countries
Citizens of neighbours Argentina and Bolivia have had their fair share of economic woes and high inflation rates during the past year, but while one country seems to be turning around its fortunes the other looks set to implode.
Argentina emerged from recession in this year’s third quarter, with their seasonally adjusted GDP showing 3.9% growth from July to September. The recent figure marks the first quarter of growth since the country entered recession last year and is a major milestone for president Javier Milei, who is bidding to end Argentina’s long-running economic crisis.
Milei has now been in office for just over a year and during this time has aggressively cut public spending as part of his austerity drive. This followed the previous government’s use of inflation-fuelling money printing to fund spending, which had left the country in a precarious position.
Initially, Argentina’s crisis deepened, but coupled with inflation rates starting to drop, the latest GDP figure may be the start of a strong rebound.
On the other hand, Bolivians are suffering with increasingly high food prices, static wage levels and queues for fuel. Inflation is now at its highest level for over a decade and the country faces its worst economic crisis this century.
The Bolivian economy has long been one of the most stable in South America, largely thanks to its commodities-backed “economic miracle” in the 2000’s. However, in direct contrast to Milei’s cost cutting, Bolivia’s dominant socialist party has been demonstrating a spend-to-grow economic model which is imploding.
While the country’s natural gas exports have long been the key source of foreign income, they have halved in the last decade and the central bank’s currency reserves have now almost depleted.
The economic decline has turned Bolivian politics sour. In June, a military faction failed in a dramatic coup attempt and La Paz has witnessed street battles between the government’s security forces and protestors.
