Question

1. Companies encounter many difficulties in adapting their strategies to deal with the effects of a currency crisis that becomes an economic crash. How did local and international companies adapt to the business environment at the height of Argentina’s crisis?

2. What has been the impact on the savings and purchasing power of ordinary citizens?

Answer 1

Companies encounter many difficulties in adapting their strategies to deal with the effects of a currency crisis that becomes an economic crash. How did local and international companies adapt to the business environment at the height of Argentina’s crisis?

Local and international companies which collect revenues in Argentine pesos, had a difficult time repaying dollar-denominated debt as the peso value fell. In my opinion; first, companies should adopt the U.S. dollar as its official currency. Both local and international companies should request the government to cut spending and taxes to stimulate economic growth. Also, companies should request to the Argentina government to promote further deregulation based on the progressive reduction rule, such as employers lay off workers ability. Other strategies to fight the crisis is to cut off the salary and number of public sector employees, specifically in those are that will not lead to the production and consumption of public resources.

What has been the impact on the savings and purchasing power of ordinary citizens?

The impact on the saving and purchasing power of ordinary citizens has been significantly difficult. People in Argentina opted to spend on much cheaper goods than before. According to research, it was reported that the inflation prompted the Argentines to spend rather than save and see their money depreciate in value. Also, high rates of unemployment soared and poverty ensued too and by then, the purchasing power was at an all time low.