Why The Argentine Government Was Experiencing A New Economic Crisis? (Essay Sample)
THE TASK WAS TO DETERMINE WHY THE ARGENTINE GOVERNMENT WAS Experiencing a New Economic Crisis. THIS SAMPLE PROVIDES VARIOUS REASONS LEADING TO A sudden shutdown of ARGENTINA'S major economic activities . SOME OF THESE FACTORS INCLUDES ; loss of business and consumer confidence, fluctuation of THE Argentine peso , ISSUES IN stock market and foreign debts. ALSO, Lack of sufficient economic reforms AND OVER-RELIANCE on agriculture HAVE CONTRIBUTED IN WORSENING THE ARGENTINE ECONOMY LEADING TO A NEW ECONOMIC CRISIS.source..
Why Argentina Experiencing A New Economic Crisis
Why Argentina Experiencing a New Economic Crisis
The economic crisis is a situation in which there is a sudden shutdown of major economic activities of a country as a result of a financial crisis. This crisis is characterized by a decline in the country's GDP, an increase of prices and drying up of liquidity and amount of money available for investment. The new economy of Argentina looks to be headed for another economic storm as the prices of most products are rising rapidly, whereas, there is a significant drop in the Argentina peso. Further, there is overvalued currency in Argentina and debts are primarily denominated in dollar. As such, this paper highlights the causes of the new economic crisis in Argentina.
Primarily, an economic crisis is caused by loss of business and consumer confidence. Argentina's new economy is headed towards another economic storm as characterized by irrational exuberance of its business cycle. There is high-interest rates among the majority of Argentina's financial institutions and credit lending facilities limiting the amount of money available for investment CITATION Chr16 \l 1033 (Daseking & Ghosh, 2016). For instance, a 40 percent hike of Argentina's central bank has dried up the liquidity of the country and lowered the purchasing power of the Argentines.
Currency fluctuations is another critical factor regarding Argentina's new economic crisis. There is a significant fluctuation of Argentine peso when compared to other currencies in the global environment, and this creates more economic issues. For instance, the value of the peso has declined by more than 20 percent against the U.S dollar CITATION Pad15 \l 1033 (Desai, 2015). This is due to the current economic and monetary policies of Argentina as well as hyperinflation making the peso lose its value. Consequently, majority of foreign investors, local companies, and residents have converted their savings into foreign currencies such as the U.S dollar and the euro.
In addition, stock market issues and foreign debts is another factor crippling the new economy of Argentina. A crush on the nation's stock market has r
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