“One of the probable effects that the acceleration of inflation will trigger will be the retraction of consumption. Although there are still no official data on what happened in that month, the figure for retail sales published by CAME (Argentine Chamber of Medium-Sized Enterprises) shows a year-on-year drop in July of 3.5%”, indicated a PwC report.
Along the same lines, he warned that “another limiting factor for growth is the sustained increase in restrictions on imports” and remarked that “for the time being, despite the announcements, there is no sign that the critical situation of the BCRA’s reserves will to improve”.
In turn, PWC insisted that “the fact that the gap between the official and financial exchange rates remains so high maintains devaluation expectations and constitutes an incentive to delay exports, waiting for an improvement in the exchange rate.”
“Another limitation for the development of the real economy is the rise in rates of interest. At the end of July, the BCRA announced a rate hike of 8 points that was reinforced on August 11 with another increase of 9.5 points, taking it to 69.5%, which represents an effective annual rate of 97%. Although necessary to contain inflation and exchange rate pressures, this generates a direct increase in the cost of credits demanded by the productive sector and for consumption, impacting demand,” he explained.
The work collected official data from INDEC and recalled that the surveys of expectations in industry and construction expressed a deterioration in them.
Source: Ambito
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