Buenos Aires The volatility of its economy means that Argentina does not overcome the "middle income trap", so stabilizing it is a necessary condition for the country to achieve quality development with better incomes for the population, said economist Matías Carugati.

In an interview with Xinhua, the expert referred to why Argentina does not overcome the "middle income trap" and what should happen to overcome this situation, highlighting innovation as a key element for the country's economy to prosper.

"With a long-term view, the stagnation of Argentina's growth is largely due to a drop in productivity Since the 1970s, approximately, the Argentine economy was subject to a lot of volatility: reforms and counter-reforms, external shocks and bad economic policy decisions that made disasters at the macroeconomic level, "Carugati explained.

For the chief economist of the consulting firm Management & Fit (M & F), "the volatility of growth and inflation in the country are high in global comparison." The uncertainty associated with a very volatile economic framework pushes families and businesses to adopt 'defensive' decisions, which is not optimal in economic terms. "

"As any economics textbook covers, growing sustainably at reasonable rates is impossible if productivity does not grow in the long term, and that is what happened in Argentina," he explained.

According to the World Bank (WB), GDP per capita technology of US $ 1,148.6 in 1962, and US $ 12,440.3 in 2016. The highest record was reached in 2015, when GDP per capita was set at US $ Thirteen. 467.10, according to the data of the entity.

In the country, the third largest economy in Latin America behind Brazil and Mexico, 35% of workers are not registered, so they lack social security coverage. The unemployment rate is 7.2%.

The WB recently acknowledged that Argentina had the best performance in the region in reducing poverty and boosting shared prosperity between 2004 and 2008.

The income of the forty percent more inclined grew at an annual rate of Eleven, eight%, faster than the average growth of 7.6%. This trend remained, but decreased after 2008.

Asked about what should happen to overcome the "middle income trap", Carugati said that "first, stabilize the macroeconomy, which means lowering inflation to normal levels, less than two digits, reduce the fiscal deficit, which it is not sustainable in the long term, and to avoid deep external imbalances ".

"Secondly, to fix the microeconomy, by this I mean to implement structural reforms that make the Argentine economy more competitive and make it more attractive for investment," he added.

For the analyst, "the list of things to be reformed is broad, but should be started by infrastructure, taxes, the goods market, the labor market, the financial system and public standards."

In the country, the third largest economy in Latin America behind Brazil and Mexico, 35% of workers are not registered, so they lack social security coverage. The unemployment rate is 7.2%.

Also, according to data from the National Institute of Statistics and Census (INDEC) corresponding to last March, the Argentine economy grew by 2.9% in 2017, after the contraction of 1, eight% of 2016, while inflation would exceed this year the official guideline of 15%, to reach 20% according to local experts, or to a floor of 19.2%, according to the latest report on the country of the International Monetary Fund (IMF).

In May, the dollar reached its historical maximum, with a parity of 25, fifty one pesos per unit, for a depreciation of 21% in the month and 34% so far this year.

In this context, Carugati emphasized that "the Argentine case is clear in terms of the importance of maintaining a healthy macroeconomy, consistent economic policies over time and, above all, sustaining solid institutions, including from the division of powers to respect The contracts are three things that have systematically failed in our country. "

As factors that would allow quality development, the analyst mentioned innovation and knowledge.

"The trend of recent decades is that economic development is more linked to services and not so much to traditional industry, in this sense, innovation and knowledge are key aspects to expand dynamic services, which are those that end up improving, and a lot, the productivity of a nation, "he said.

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