A general view of the economy ahead of the midterm elections—Part I: Domestic issues
This report and the next will examine where Argentina stands economically and financially nineteen months into the Milei administration and three months before a midterm election that will critically influence what the administration will be able to do for the rest of its mandate. The analysis is divided into two parts that cover domestic and external issues separately although they are all obviously interrelated. We begin with the domestic issues in this report (the external issues will be tackled in the next report). Among the most important domestic issues are: 1) Will inflation continue to fall, or will it have to rise temporarily to accommodate adjustments in relative prices including, but not limited to, the real exchange rate? 2) Is the economic recovery that began in the second quarter of last year tapering off? Will it be followed by actual growth? 3) Is fiscal consolidation under threat by Congress? How sustainable is the primary surplus? 4) Will the battle between the Executive and the duo Congress-Provincial Governors affect the results of the midterm election? And 5) Does monetary policy based on the control of M2 growth facilitate or hinder remonetization?
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