BUENOS AIRES - People may pack the pews at St. Benedict the Abbot parish in the upscale Belgrano district of the Argentine capital, but that doesn't translate into demand for the images and statues of saints that Pedro Atencio sells outside the church.
"Sales are down due to the economy," he says.
Times have turned tough in Argentina, where vendors such as Atencio blame old economic issues such as inflation and devaluations for sinking sales. Pessimism is rife as prices rise, purchasing power erodes and people prepare for the possibility of another economic crisis - in a country once among the wealthiest in the world, but better known now for recurring crises and calamities.
"This is a country that is constantly on the road to the next crisis," says Luciana Carcione, economist with Orlando J Ferreres Asociados in Buenos Aires. "Every 10 years or so, we end up in some sort of crisis, large or small."
Economists such as Carcione see worrying signs, though she says "this won't be a disaster" like 2001, when the currency collapsed and Argentina defaulted on debts of approximately $95 billion - leaving it frozen out of international credit markets.
Still, inflation is accelerating and projected to hit 40% in 2014, according to Sergio Berensztein, director of PoliarquÃa Consultores. Unofficial estimates put the inflation rate at above 25% in 2013, much higher than the official government rate of 10.9% - a figure few believe, Berensztein says.
A study from consultancy Estudio Bein estimates inflation has eroded wages nearly 10% over the past four months. The Argentine peso was devalued nearly 20% in January, further diminishing purchasing power and making imported items more expensive.
"The government was able to successfully stop the exchange crisis with a devaluation and raising of interest rates," Berensztein says, adding the "fiscal deficit" and government spending are still high.
Outside investors remain skeptical. Moody's downgraded Argentina's sovereign rating March 17 to Caa1, seven levels below investment grade status, Bloomberg reported.
Rising incomes, along with inflation, spurred consumer spending during the past decade. Robust sales of soybean crops brought in badly needed foreign reserves, which were used to pay debts. Those reserves have dropped below $30 billion, prompting the devaluation.
"For nearly a decade, (reserves) were nearly $50 billion. â?¦ That gave the government an, 'I don't need the world' attitude," says Fernando FarÃas, radio host in Buenos Aires. "They have had to do something to bring Argentina back to the world financial markets."
Inflation started increasing in recent years, prompting Argentines to spend instead of save, or move their money out of the country.
Automobile sales reached record levels in 2013, while Argentines traveled abroad like never before - both symptoms of high inflation, which has outpaced interest rates.
"There's an incentive to spend that money now, whether in a restaurant or on a trip or on a flat-screen TV, rather than keep it in a bank and see it lose 30% of its value after a year," Farias says.
The spending even reached the shanties of Buenos Aires, where the poor attempted to preserve their patrimonies by purchasing small cars - which tend to maintain their value in Argentina - or bricks to build additions to their homes.
"We now have traffic jams" in the shanties, says Father Carlos "Charly" Olivero, one of the parish priests Pope Francis sent to work in poor areas - places he made a priority of his ministry in Buenos Aires.
Amid rising inflation and devaluation, Father Olivero reports an increase in the demand for social services, such as parish food and clothing banks.
Under the constant threat of such crises, people take creative precautions. Oswaldo Peñalosa is an engineer by training, but he bought a taxi license 25 years ago and keeps renewing it annually, even if he isn't driving his cab. "It's been a life preserver," he says.
Argentines traditionally have bought greenbacks as a safeguard against instability at home, but the government imposed restrictions in recent years as its reserves began to decline.
Saving in U.S. dollars is illegal in Argentina, and those traveling abroad pay a 35% tax on credit card purchases made outside the county. That doesn't stop people from purchasing greenbacks on the black market.
"Argentines don't invest," says Máximo Merchensky, a former official in the Buenos Aires municipal government and critic of President Cristina Fernández de Kirchner. "They take (their money) out of the country or hide it under the mattress or in a safe, after first converting it into dollars."
Fernández dismisses any talk of crisis in Argentina but has hit back against critics and business owners she accuses of improperly raising prices. Billboards encourage people to denounce stores and supermarkets not respecting price freezes ordered by the government.
A smartphone app developed by university students allows customers to check stores' compliance. The president's policies of cash transfers and subsidies have found favor with the poor - a group more likely to vote for her, according to polls done by PoliarquÃa Consultores - and groups such as students, who receive stipends to attend school.
"Even with inflation, wages have always kept up," says Juan Manuel Estévez, a social worker and supporter of the president. "The problem is the distribution of wealth."
Fernández promoted prosecutions of people publishing unofficial inflation figures, and the International Monetary Fund censured Argentina for its shoddy statistics. She promised no devaluations of the peso.
Since the president's popularity has fallen and Fernández is unable to run again in 2015, analysts see opportunity for change in the coming years.
"It's a pragmatism that's late and incomplete," Berensztein says. "Due to problems with reputation and communications, the magnitude of the change coming isn't being appreciated."
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USATODAY.com
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