“We estimate that economic activity may exhibit a (slight) seasonally adjusted drop in August, or, in the best of cases, a new stagnation. In this sense, the economy could have shown with a certain delay the effects of the financial uncertainty of July, in a context in which the effects of the use of stocks that had helped sustain the level of activity are diluted, “they pointed out from Ecolatina .
“For the rest of the year, lThe evolution of the economy will exhibit a cooling. The prospects for the last months of the year will be affected by continued restrictions on imports, which would limit the expansion of the domestic market (lower supply of imported goods) and would generate complications in production processes (due to fewer inputs available). Also, the acceleration in inflation will hit revenues harderwhile the adjustment of public service rates will subtract disposable income from households to consume”, they detailed, adding that “a more contractionary bias of economic policy will be added to this.
However, they noted:Despite these limited prospects, we raise our projection to 4.5% year-on-year in the annual average of 2022. The reason for this change is a greater statistical drag for the rest of the year after incorporating the GDP data for the second quarter, as well as a better-than-expected performance in July. In any case, this number includes the aforementioned brake on the growth of activity in the second half: the economy would show a drop of almost 1 pp when contrasting December 2022 against June of the same year.
looks
Analyzing this situation, Eugenio MariChief Economist of the Fundación Libertad y Progreso, told Ambit: “In the first half of the year, economic activity continued its recovery process, which was above expectations. The improvement in the terms of trade as a result of the war in Ukraine allowed our country to have a positive income shock that underpinned the expansion of activity. With this, our projections suggest that this year the economy would register an annual growth of 4.7%”.
“But 2022 will have two well-marked phases. A first semester of expansion. And a second semester where the engines that helped in the first half of the year will no longer be running. The latter will be especially noticeable in the last quarter, where we expect a GDP contraction of more than 1%”, Marí stressed.
The reasons for this fall in the second half, added the economist, have different origins: “This declining trend is explained by international factorssuch as the fall in the terms of trade and the slowdown in international demand, and other local ones, which include the growing uncertainty, the acceleration of inflation, the productive problems derived from the lack of access to imported inputs and the drought that affects the agro-industrial activity”.
warning signs
For his part, as explained by the director of Analytica Claudio Caprarulo, with the growth that left the first semester, “only drag, if the level of production is maintained, the year would end with a growth of 5.2%”. “Nevertheless, our projection gives a growth of 4% and it is the same projection of the Government in the Budget that it recently presented for 2023”, he remarked.
“This is already seen in the indicators: the EMAE in July shows that activity stagnated and some indicators that allow evaluating internal activity, with respect to tax collection, show falls in August. Then, activity is going to suffer in this second half of the year: slightly, but it is going to fallCaprarulo added.
When wielding the reasons for this -in principle- stagnation, the economist reviewed: “It is because there is a policy that is prioritizing a certain stabilization, but that entails lower levels of activity. And one of the main reasons, for example, is the reduction in public spending, which is one of the engines of the economy and drives it in different aspects: on the one hand, in public works and the construction sector, which is one of the most affected since it was decided to reduce spending sharply as of July. I think that’s one of the main factors.”
“At the same time, We also have to consider that from the middle of the year there was an acceleration of inflation and we are already at an average monthly inflation of 7%. With these levels, wage earners are going to be hit even harder, especially those in the unregistered sector and the self-employed, who make up 50% of workers in Argentina”, he remarked.
In this scenario, Caprarulo stressed that the Government should outline the measures it will take in the future, “so that we can have a more stable economy and that the path of growth can be recovered.” “And on the way, What is going to be very important is to protect the most vulnerable sectors, low-income families that have already fallen into poverty, and also the great mass of vulnerable workers.s, that they do not have any type of coverage and that surely when the level of activity falls, they will be the first to be left out of the labor market”, he concluded.
Source: Ambito
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