NEW YORK/BUENOS AIRES, Dec 21 (Reuters) – Gregorina Victorica, 86, a retiree from Buenos Aires, has been cheering for Argentina’s World Cup victory, which has raised spirits in the South American nation and brought joy to a town hard hit by rising prices and economic malaise.
But despite the glow of victory in a dramatic, upside-down final against France, reality is biting with inflation approaching 100%, strict capital controls, near 40% poverty and fears of more debt defaults. on the horizon.
“The World Cup is an immense joy that revives us after suffering the economic crisis for so long,” said Victorica. “But soon we will have to fall back into reality and face the situations that overwhelm us every day.”
Argentina’s heartwarming victory, the first since Diego Maradona lifted the trophy in 1986, drew millions of people to the streets on Tuesday to cheer for the team led by star Lionel Messi, an outlet for the frustrations of the leaders who they failed to get the economy right for years.
The crowd was so large and raving, with some estimates 4-5 million people in the streets, that the open-top bus parade had to be discontinued and the players flown into helicopters to fly over the city.
But in the hazy hangover of the victory party, the Argentines are coming back to earth. The top grain-producing country, once one of the world’s wealthiest nations, posted annual inflation of 92.4% in November. The reference interest rate is 75%.
Problems with printing money, an artificially overvalued peso and low foreign exchange reserves are becoming more acute. Investors fear that Economy Minister Sergio Massa, hired to fix things in August, is not making enough political reforms, with his sights set on a general election late next year that the government fears it will lose.
“Massa is just trying to play whack-a-mole, he’s desperate not to make any significant adjustments before the 2023 election,” said Ted Mann, senior analyst for emerging markets equities at AllianceBernstein.
“Under Massa, the Argentines are extraordinary can kickers. They are better at kicking cans than Messi is at kicking balls.”
‘THE COUP WE NEED’
Some Argentines are more optimistic.
“The World Cup gives us hope and the desire to believe,” said Osvaldo Hassan, a 62-year-old businessman from Buenos Aires. “It could be the push we needed to build consensus and move the economy forward.”
Camila Gotelli, 25, who works in marketing, said the “historic” victory could boost Argentina by attracting more tourism, creating jobs and raising the country’s global profile.
World Cup victories can give a small boost to a country’s economy in the months that follow, an academic paper from Britain’s University of Surrey found, helping to boost exports.
In the short term, it can also give a boost to the leftist president Alberto Fernández. His popularity has plunged due to the impact of the COVID-19 pandemic and economic woes, despite closing a new $44 billion deal with the International Monetary Fund this year.
“For me this is going to favor the government for a few days, because people are distracted,” said Carlos Zárate, a 63-year-old businessman from the city, although he added that once the southern hemisphere summer ended “reality was going”. beat”.
Last month, ratings agency Moody’s criticized the country, citing rising central bank debt as a risk to financial stability. S&P further downgraded Argentina’s already troubled local currency bonds to “junk” territory.
Graham Stock, a senior strategist at BlueBay Asset Management, saw positive economic changes potentially triggered by next year’s election, where a change of government is on the cards after the ruling coalition lost last year’s midterm elections.
However, the economic changes would not happen overnight and needed everyone to contribute, not just the soccer team, said María Belén Pereyra, 32, an elementary school teacher.
“We celebrate because it represents us as a country, but this was the sacrifice of about 30 people,” he said. “For the economy to change, we all need to push.”
Reporting by Rodrigo Campos in New York and Belen Liotti in Buenos Aires; Written by Adam Jourdan; Edited by Alex Richardson
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