Saturday , July 31 2021

They expect the economy since April – 02/12/2018



In the past three years, the predictions of the moment in which the Argentine economy would grow, has failed so many times that no one is now encouraged to record the new stone projections. With low profile, analysts agree that the recession that has hit the country for eight months It will be extended at least until April. And in the second quarter of the coming year would begin, very hot, recovery. For this time, the preview is met, it is vital that interchangeable stability is supported that interest rates are lowered and that summer heat brings some power recovery.

In the preview of his arrival at the G20, Christine Lagarde, the IMF director, published the strongest forecast on what will happen in 2019 with the local economy. "We will begin to see a positive development of the program in the second quarter of 2019, that is to say April, May and June. At that time you must see the beginning of the change. We should see an important drop in inflation. "The Government adheres to this vision. From the team of Minister Nicolás Dujovne indicates that the promised green shoes will begin in March.

The specialists consulted by the Economic agrees that there is a good opportunity for recovery to come in the fall, but still there are risks.

For Gustavo Reyes, an economist in the Mediterranean Foundation, we must not lose the fact that "Today the recession is more widely spread than when it started. In the second quarter the fall was strong, but the impact of the drought was very marked. In the third quarter the negative impact of agriculture was no longer felt, but business and industry deepened their fall. And now the recession has spread to some sectors that have not been in the red, like banks. With the growth of the tariffs, the expansion of the credits begins to fall ".

In order to change, we will have to wait until the second quarter. Kings differ between the "exogenous" factors of recovery and the "endogenous" factors. Among the first there are The positive effect of the harvest who will be avenged in 2019 from the sad numbers this year. "But the key is achieve endogenous change. To turn the recession, we must end the vicious circle of high uncertainty, low consumption, expectations of devaluation and inflation. "

In this regard, Kings stressed that "the recession begins to do its job Cap on inflation"An indication of this is that" Seven-year inflation rates exceeded 7%, in October it was over 4% and expects to reach 2.5% in November. The strong recession and the exchange rate of tranquility that were up to one week are two factors that will clearly play in favor and thus We will have a smaller inflation. This is a necessary condition for the reactivation, because, as the inflation falls, expectations of devaluation will begin to fall. Without this it is difficult that the interest rate continues to fall. So wages would stop losing and before the end of the year they could earn a bit. "

Kings indicate that this "optimum scenario is not free of risks." In particular, the economist mentions the slowdown that threatens the United States, China and the European Union. "The big blocks will have a worse year than that in 2019. But the positive thing is that Brazil and Chile will boost their growth."

For the Ferreres Study "in the immediate term, although we believe that the recessive phase of greater waterfall has disappeared, We do not expect widespread dynamism of the sectors that allow to talk about a solid recovery. "Faustus Spotorno, the director of the consultation, indicates that the recovery will depend on whether the competitive exchange is supported, the actions of agriculture and the growth of Brazil.

To these factors the evolution of purchasing power is added. Guido Lorenzo, general consultant economist LCG, realizes that "there are signs that Maybe a reward of wages. You already see businesses that negotiate 45%, as the case of Commerce, which is the largest. If this path follows, there could be some room for improvement between the first and second quarters. We must also remember that the Treasury-dependent income, such as pensions, will be indexed with inflation this year, which was high. Although at macro-level this is not ideal because it generates stiffness, at least it does not allow real income to fall as much. "

The good news would come from construction and commercial sectors. "On the investment side, maybe some surprise in sectors where profit was extended, as it happened with construction. The relationship between costs and the price per square meter in dollars generates an important attraction for investors, despite the fact that the demand will soon be diminished. "Lorenzo also notes that" the first quarter's bet will come from the side export. Not only for the good harvest but also due to the dynamism of the manufactured goods of industrial origin that we saw this year. This could cause the increase of export volume to be about 15 or 20%. "

However, the LCG economist states that "2019 There is no risk for free. On the one hand, there is the political uncertainty faced with the choices that can make negative reactions, which generate less investment at the same time and this causes the action to get worse. The second risk I see is in the "cohesion" between monetary policy and 40% of political parliaments. Growth of the monetary base of 0% is a very competitive policy, so there there is a certain inconsistency macro that you have to see how it solves. And the third thing would be that in 2019 there would be a possible outflow of capital generated by an external event or of the same political uncertainty. "

From EcoGo, Federico Furiase emphasizes that the economy "Fit floor in November and will begin to recover slowly in December with the reopening of parities, the delay of inflation, the gradual reduction of interest and the wheat harvest. "

Furiase warns that the recovery will be slower in the real wages and credits. "The double zero of the fiscal and monetary adjustment puts a roof on the houses and floors of interest. The challenge is how much the real exchange can be delayed with external funding for wages to recover against inflation after 2018 in which lost of collapse. And let's see what banking the Central Bank has to reduce the tax and give an airplane to the economy without generating a new exchange jump that threatens inflation. "

Even in the most optimistic scenario it is almost impossible for 2019 to end in red. After a 2.5% drop in GDP, 2018 will leave an important statistical drag. For Kings, the next year will close with 1.5% drop. According to Furiase, "it will be difficult to fall from the average of the year, but with an average quarterly recovery of 0.6% we could reach the quarter with a growth of 2 or 3% year-on-year."

"I am not so pessimistic," says Lorenzo. "We see a marginal fall for 2019, which implies an increase between activity points, taking the effect of the drag".


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