Argentina’s Javier Milei tells nation to brace for painful economic shock | Canada News Media
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Argentina’s Javier Milei tells nation to brace for painful economic shock

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Newly inaugurated libertarian president warns there is ‘no alternative to a shock adjustment’.

Argentina’s new President Javier Milei has warned his country’s people to prepare for painful austerity measures as he seeks to turn around decades of economic stagnation and decline.

Taking office on Sunday after his upset election last month, Milei used his inaugural address to prepare Argetinians for the short-term hardship he insists is necessary to fix the biggest crisis in the country’s history.

In a break with tradition, the 53-year-old economist delivered his speech to supporters with his back turned to the legislature.

“There is no alternative to a shock adjustment,” Milei said after taking the presidential baton and sash. “There is no money.”

Guests at the inauguration included Ukrainian President Volodymyr Zelenskyy, Hungary’s nationalist Prime Minister Viktor Orban, right-wing former Brazilian leader Jair Bolsonaro, Uruguay’s conservative leader Luis Lacalle Pou and Chile’s leftist President Gabriel Boric.

Latin America’s third-largest economy, which has stumbled between crises for decades, is grappling with annual inflation of higher than 140 percent and a 40 percent poverty rate.

The country owes $45bn to the International Monetary Fund.

Milei, who is known for hard-right libertarian views, has promised a series of radical measures to fix the economy, including spending cuts equivalent to 5 percent of the economy and switching the Argentinian peso for the United States dollar.

A self-described “anarcho-capitalist”, Milei on Sunday reiterated that the state would shoulder the burden of getting the country’s finances in order.

“We know that in the short term, the situation will worsen, but soon we will see the fruits of our effort, having created the base for solid and sustainable growth,” he said.

In one of his first actions in office, Milei announced on social media that he had signed a decree to slash the number of ministries by half, from 18 to nine.

Milei, whose abrasive style has drawn comparisons with former US President Donald Trump, rose to fame with his diatribes against the “thieving” political class and invocations of Argentina’s “golden age” during the early 20th century.

His anti-establishment message struck a chord with Argentinians, particularly young men, after successive governments presided over the country’s decline from one of the richest economies to a cautionary tale of economic mismanagement.

Milei decisively beat former Economic Minister Sergio Massa of the centre-left Peronist coalition in a run-off election on November 19.

Still, Milei will need to negotiate with rivals to govern effectively as his coalition bloc lacks a majority in the legislature.

There have been signs that the political maverick could soften his more radical positions in office.

His cabinet includes mainstream conservatives in favour of ideological libertarians, while talk of shutting the central bank and dollarisation has dissipated in recent weeks.

 

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Health-care spending expected to outpace economy and reach $372 billion in 2024: CIHI

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The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.

The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.

CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.

This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.

While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.

Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.

The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.

This report by The Canadian Press was first published Nov. 7, 2024.

Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.

The Canadian Press. All rights reserved.

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Trump’s victory sparks concerns over ripple effect on Canadian economy

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As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.

Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.

A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.

More than 77 per cent of Canadian exports go to the U.S.

Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.

“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.

“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”

American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.

It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.

“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.

“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”

A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.

Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.

“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.

Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.

With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”

“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.

“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”

This report by The Canadian Press was first published Nov. 6, 2024.

The Canadian Press. All rights reserved.

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September merchandise trade deficit narrows to $1.3 billion: Statistics Canada

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OTTAWA – Statistics Canada says the country’s merchandise trade deficit narrowed to $1.3 billion in September as imports fell more than exports.

The result compared with a revised deficit of $1.5 billion for August. The initial estimate for August released last month had shown a deficit of $1.1 billion.

Statistics Canada says the results for September came as total exports edged down 0.1 per cent to $63.9 billion.

Exports of metal and non-metallic mineral products fell 5.4 per cent as exports of unwrought gold, silver, and platinum group metals, and their alloys, decreased 15.4 per cent. Exports of energy products dropped 2.6 per cent as lower prices weighed on crude oil exports.

Meanwhile, imports for September fell 0.4 per cent to $65.1 billion as imports of metal and non-metallic mineral products dropped 12.7 per cent.

In volume terms, total exports rose 1.4 per cent in September while total imports were essentially unchanged in September.

This report by The Canadian Press was first published Nov. 5, 2024.

The Canadian Press. All rights reserved.

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