Argentina: on the one hand, +'s, on the other hand, -'s

lots of pluses and minuses in the latest imf report on argentina...

on the plus side...

Argentina's economy has continued to deliver very positive outturns in the period following the 2002 crisis. After three years of around 9 percent growth, real GDP has surpassed its 1998 peak by some 6 percent, led by strong investment and consumption.

however...

However, inflation has risen steadily ending 2005 at 12.3 percent.

on the plus side...

The post-crisis fiscal adjustment is historically unprecedented. In 2005 the overall cash surplus of the consolidated government was 2½ percent of GDP, underpinned by strong revenue performance.

however...

However, non-interest spending rose by 11 percent in real terms, leading to an erosion of the primary surplus (to 4½ percent of GDP in 2005, from 5 percent in 2004) despite the high rate of economic growth...

on the plus side...

The exchange rate has remained stable amid sustained intervention by the central bank. Interest rates have risen gradually as bank lending has recovered and liquidity conditions have normalized...

however...

...but short-term interest rates remain negative in real terms.

on the plus side...

There has been a demonstrable improvement in social conditions. By end-2005, the poverty rate had declined to 34 percent from the peak of 57 percent reached in 2002, and extreme poverty had more than halved to 12 percent. Other social indicators such as secondary school enrollment and completion rates, as well as formal health insurance coverage, and the infant mortality rate have also seen impressive improvements in the past few years.

however...

...the labor market remains highly segmented with a widening gap between formal and informal sector wages.

the "informal" economy, according to reports by the argentine government, comprises more than 45% of the total wages paid... for those of you wondering what an "informal" economy means, it's very simple... people are hired and paid off the books, without paying taxes, without receiving benefits, and without any employment security whatsoever... it's a system where only the have's win and the poor take it in the chops...

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