New Kirchner, same strong economy?

Marketplace Staff Dec 10, 2007

New Kirchner, same strong economy?

Marketplace Staff Dec 10, 2007


Doug Krizner: Today Argentina inaugurates its first female president, Cristina Fernandez de Kirchner. And in another first, she’ll succeed a president named Kirchner. That would be her husband, Nestor. He rescued Argentina from an economic trainwreck. Her job will be to keep from falling off the rails again. Rachel Hopkin reports from Buenos Aires.

Rachel Hopkin: It’s a busy morning at one of Buenos Aires’ biggest malls. Crowds of shoppers are out enjoying the benefits of five years of economic growth.

If Mrs. Kirchner wants to sustain that, she’ll have to overcome some big challenges, says economist Miguel Kiguel.

Miguel Kiguel: One is that inflation is on the rise. Second, energy is a problem, that is going to be a constraint to growth in the future. And third, the institute of statistics in Argentina, which is not working properly.

That’s putting it mildly. For months, the institute has been accused of manipulating Argentina’s inflation rate. Officially, it’s 8 percent, but virtually everyone thinks it’s closer to 20. And so far, Kirchner appears to be continuing the charade.

Economist Alan Cibils:

Alan Cibils: She has said that their inflation index is fine, when nobody believes that. So the fact that she’s saying that everything is OK there makes one wonder what her policy will be vis a vis that in the future.

That’s not the only big question about her future. Cristina is the wife of the outgoing president. So Argentines are wondering whether Mr. Kirchner will stay in the back seat, or will his hand be steering the wheel?

Kiguel: On the economic area, she doesn’t really have a strong agenda. So I think initially at least her husband will have a big say. But she has a very strong personality and probably over time she will start to be in the driver’s seat.

If she wants Argentina to be a global player, Kirchner needs to settle up with the Paris Club, the countries who helped bail Argentina out back in 2001.

Miguel Kiguel:

Kiguel: Cristina Kirchner will like to reach an agreement with the Paris Club. It’s part of inserting back Argentina with the civilized world.

But to do that, Kirchner must work with the International Monetary Fund. And Argentina blames the IMF for many of its past problems. Today though, IMF head Dominique Strauss Kahn will be a guest at the new president’s inauguration.

In Argentina, I’m Rachel Hopkin for Marketplace.

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