The Changes Of Argentine Demand Structure After The International Financial Crisis

The global financial crisis which broke out in2007led to the decrease indomestic investment as well as the import and export in Argentina. Argentinegovernment liberalized the monetary policy and broadened the scale and power ofadministrative intervention to stimulate the economy, at the price of a high inflationrate. Thus, the consumption rate ran smoothly with crisis up slightly; the net exportrate edged down and the crisis increased instead of decreasing and the investmentrate went high and down constantly without any breakthrough in efficient investment.Given the specific situation of demand structure in Argentina, researches in itseconomic responses to the crisis would give improvable references to China.The study found that the increase of Argentina’s final consumption mainlyresulted from the rise in price, rather than actual output from non-benign productionmechanism. To meet the short-term consumer demand, the government bore hugestructural debt, seriously impeding the effective long-term investment. Thedepreciation of exchange rate hindered imported goods required by industrialupgrading, which in turn restricted exports, especially manufactured goods exports.Therefore, it’s more difficult to repay debts in foreign currency. The developmentstrategy for developing countries advocated by New Structuralism neglected thepossibility of inflation, and didn’t apply to Argentina’s economy. Expansionarypolicy failed to promote the industrial upgrading, but even reversed it.