The Downturn

I've been asked a lot about how the economic downturn is effecting Argentina, and the truth is, so far we haven't seen much. What is of concern is the terrible drought we've had, resulting in the loss of many cattle and produce. As a country which depends almost completely on its own food production, as well as having crops as a major export, this is bad news. At the same time, the peso is losing value, making Argentina more affordable to Americans and helping with tourism. (This seems to be a particular niche with recently-laid-off bankers).

Despite this, the other day the president, Cristina Fernandez de Kirchner warned that Argentina will feel the effects of the global downturn, and that this year will be difficult.

However, Argentines still look at what's happening in the world from a detached stance. Economic crisis is part of their everyday experience. In 2001, they experienced what is still the worst economic crisis in modern history. Economic policy, inflation, and debt are daily headlines in the news, equally today as last year or the year before.

The IMF currently refuses to loan Argentina additional money, until they share how they calculate the highly doubted inflation rate of 8.8%. Independent figures show basic living expenses have an annual inflation rate of 14.3% while food is pegged at 15.5%. Other sources report inflation rates above 20%. (The U.S. has a rate of 4.2%)

And then the extras? Here's some changes I've seen in the last 3 months (all listed in pesos):

Local buses: $1.50-->$1.90

Gym membership: $50-->$65

Internet service: $60-->$85

Rent (apparently a lease doesn't guarantee anything): $550-->$600

1-hour Spanish/English lesson: $20-->$30

Health Insurance Premiums: Jan. 2008: $210, Aug. 2008: $274 (Another raise was scheduled to occur in December, however I'm not sure where that leaves the current premium.)

The price of produce seems to have increased by about 50% recently, however food prices are steadily climbing, year-round.

A quote from the BBC news sums up the attitude I've seen quite well, "We Argentines are used to economic crisis," says Cecilia Tornu. "We are used to an economy that goes up and then down, up and down. It will not be as hard for us as it is elsewhere in the world to survive this one."