“The worst stage of the crisis has already passed and that will be seen very clearly in the second semester. “You’ll see.”
The phrase was said by Eduardo Duhalde in mid-2002. The economy ‘had turned around’ after the exit from convertibility. Although many spoke of the ‘dead cat rebound’, Duhalde did well.
“There were hyperinflationary omens -said the then President-, “But inflation in May was low compared to the previous month and we hope that in June it will be even lower than in May, which was 4 percent.”Duhalde said in a program called ‘Conversando con el Presidente’ and was broadcast on Saturday mornings on National Radio.
Inflation that year would be 40.9%. Very high because the country came from three years of deflation. Now the price of the dollar had gone from $1 to $3.80 and that had impacted costs. The following year inflation fell to 3.7%, and from then on it never fell again until today.
“The behavior of prices in recent days represents a good index that will allow us not only to generate better expectations, but also to reaffirm that the devaluation registered in the country is competitive and that our entrepreneurs and producers barely have working capital, Argentina is going to start a virtuous cycle”, Duhalde continued.
Today, President Javier Milei seeks the same virtuous cycle as Duhalde. Also six months after taking office.
“Did the worst part happen?” asked a magazine journalist Time to Javier Milei, in an interview published in the latest issue of the magazine that has the President on the cover.
“Exactly,” he replied.
Duhalde’s agenda in 2002 was not very different from Milei’s in 2024: In addition to devaluing and praying for inflation to drop quickly because poverty had skyrocketed to almost 50%, Duhalde negotiated with the IMF and energy companies to dose the updates to contracts and rates so that they had as little impact as possible.
“The agreement with the IMF will be aimed at opening up the possibilities of receiving loans from the World Bank and the IDB”Duhalde said. He also demanded that the oil sector comply with maintaining the price of gasoline. Also, “don’t increase the gas or electricity, at least in the winter.”
In March 2018in a speech before Congress, the then president Mauricio Macri went with the same phrase: “The worst happened.”
The former President defended his gradualist strategy, which he had implemented with the help of Alfonso Prat-Gay (2015-2016) and Nicolás Dujovne (2017) as Ministers of Economy.
Despite the difficulties that his government was already beginning to encounter in financing an external current account deficit of almost 5 percentage points of GDP, a few weeks later after Macri’s phrase “the worst is over,” would really start off the worst: a pressure on the price of the dollar ($20) and the Central Bank, with Federico Sturzenegger at the head, selling US$1,471 million of reserves one day to keep the dollar at $20.55. Two days later he sold US$1,381 million. And a few days later Luis Caputo (then Minister of Finance), Sturzenegger and Dujovne called the IMF.
“The worst is over”, it continued to be heard.
Marcos Peña insisted a few weeks after settling with the IMF. “We are convinced that this path will allow us to have more tools to finish crossing that path in which we have already gone through the most difficult stage”he assured. “The worst is over”.
And a year later, In April 2019 Dujovne also repeated it: “The worst is over”.
Further back in time and before Caputo and Milei repeated the phrase, in 2021 it was Martín Guzmán, Alberto Fernández’s Minister of Economy, who assured that the economy was growing and so was employment, after the pandemic.
Economy ministers and presidents often get caught in a dilemma that is more common than you think: Everything that is said in the midst of a crisis affects the outcome of policies. Ergo, we must be optimistic even in weakness.
Six weeks after the worst financial crisis of capitalism, In December 1929, United States President Herbert Hoover declared that the economy “I was back to normal.”. It was after the Dow Jones fell 40% in 8 weeks. In the first months of 1930 came a recovery in consumption and production. The stock market gained 20%. Three months later, Hoover himself predicted that the recession would reverse in “the next 60 days. “We went through the worst.”.
But not. He tried to deflate prices to improve the exchange rate and generated a severe depression: the crisis of 30.
The economy is sometimes not everything. Saying “the worst is over” in Argentina is a big challenge. Ten days after Duhalde’s phrasethe end of his government began with the murder of Maximiliano Kosteki and Darío Santillán. The V recovery was not enough for him.