DAYS into his presidency, Mauricio Macri faces his first big threats as he seeks to fix Argentina’s ailing economy: inflation and recession.

    In his first policy moves since taking office Dec. 10, the free markets advocate made good on his promises to eliminate capital controls and cut hefty export taxes.

    But floating the peso triggered an immediate 26.5 percent devaluation and by making imported goods more expensive it will put further pressure on inflation, which already stands at well above 20 percent.

    Economists expect inflation to accelerate to 35 percent in 2016, eating into Argentines’ purchasing power and dampening spending. They predict the economy will contract in the first months of the year, although it could then pick up again if new investment kicks in and a cheaper peso helps exporters.

    Argentines knew the peso was being held artificially strong and many believe the measures are needed, but even Macri’s own supporters are worried.

    Macri believes a mix of pro-business policies and government austerity will bring inflation under control and encourage the investment that Argentina needs to grow rapidly and create jobs.

    But in the short-term he has a problem, and little space to maneuver. Interest rates are already high, discouraging investment.

    And austerity means reducing utility subsidies and restraining public sector wage hikes, both of which are unpopular.

    Macri will be helped if exports start to grow quickly, and some businesses are already hopeful.

    “The devaluation is an opportunity rather than a problem,” said Pedro Cascales, whose company Tradefin makes machinery such as units for backup supply of gas. Yet he is still wary that rampant inflation could kill those ambitions.(SD-Agencies)