Fresh from a tour of the United States and hours after having confirmed Luis "Toto" Caputo as the Minister of Economy of his government, President-elect Javier Milei incorporated more concepts to explain the situation that will outline the coming months: "Argentina will suffer stagflation."
In this sense, Milei explained that from different measures that his government will adopt, "stagflation" (recession accompanied by a rise in prices) will be generated and referred to the payment of Christmas bonuses from the public sector.
"There's going to be stagflation. Because when you make the fiscal rearrangement, it will have a negative impact on economic activity. That is why I say that the only wallet that is open is that of human capital to provide support to the fallen," he said.
The economist also said that, after those first months, he hopes that the measures taken by his economic team will allow inflation to end in a period of 18 to 24 months.
What is stagflation?
Stagflation, a concept that arises from combining the terms "stagnation" and "inflation", describes an economic situation in which there is high inflation, as is currently the case in Argentina, and stagnation, where growth rates are low or negative. In other words, a recession but with rising prices, something that is not very frequent.
One of the main causes is the issuance of money to finance the fiscal deficit, as is the case in Argentina. This issuance means that there is more supply of pesos, which are worth less and less (in relation to the dollar or other goods).