Diego Pereira and Lucila Barbeito, economists at JPMorgan, foresee that “stagflation will enter a new phase with divergent inflation and growth trends: higher inflation and real growth with a downward trend,” according to the note.
Along with annual inflation close to 100%, a record crop drought worsens the outlook for exports of the key commodities that drive activity, tax revenues and central bank reserves. Pereira and Barbeito estimate that the top three crop exports — soybeans, corn and wheat — could fall this year to $36.6 billion in shipments from $51.6 billion in 2022.
High inflation and worsening harvest expectations fuel what economists describe as a “recessive environment.”
How the economy did in 2022
The Monthly Estimator of Economic Activity (EMAE) closed 2022 with an annual growth of 5.2%. Thus, the economy had two consecutive years of growth for the first time in more than a decade (the last time had been in 2010 and 2011).
As reported by the INDEC, in December the indicator recorded a 1.2% year-on-year drop and a 1% decrease compared to November in the seasonally adjusted measurement: precisely, in the monthly comparison, it accumulated four consecutive months in negative.
He cooling of activity in the last part of the year, say analysts, will be held in the first months of 2023. In fact, they warn that different factors will affect a possible stagnation of the economy. Something that, according to different private surveys, was already observed in January.
“When looking at the numbers with which 2022 closed, it can be seen that the statistical drag is negative. And looking ahead, the lack of foreign currency, which is going to be accentuated by the poor harvest of soybeans and corn, whose prospects are getting worse and worse, it will be very difficult for Argentina to show growth this year”, he explained to Ambit the economist Jorge Neyro.
“Hopefully, we can expect stagnation, with a difficult first semester. Because there you will notice the lack of currency settlement and the impact that this will have on economic activity. The second semester will be more dominated, in part, by the electoral dynamics. But it will be difficult to see positive growth numbers this year,” added the analyst.