While the negotiations between the Government and the IMF to make the goals of the agreement more flexible, and possible announcements in this regard are not ruled out this Monday, a private report analyzed the impact that this review may have on the Argentine economy.
According to a study by the IERAL of the Mediterranean Foundation, the new goals “do not guarantee an improvement in economic expectations.” When delving, above all, into the reserves, they maintain that the “short blanket” can impact the level of economic activity, “due to lack of inputs and parts.”
In this regard, the report highlighted that while in the first two months of 2022 “CIARACEC’s export settlement reached 4.94 billion current dollars, in the same period of 2023 the income of foreign currency through this channel shrank to 1.57 billion, a decrease of almost 3.4 billion dollars, attributable to the seasonal change that triggered the ‘soybean dollar’”.
“Even if Argentina does not have to comply to the letter of what was initially committed in terms of reserve accumulation, the expectations of economic agents will continue to be affected by the fragility of the Central Bank’s balance sheet, with foreign assets shrinking and liabilities in local currency that are expanding at full speed”, he stressed.
In this sense, from IERAL they assured that “the ‘short blanket’ will continue to restrict authorizations to import and, therefore, affecting the progress of the level of activity due to the lack of inputs and parts.” “Towards the end of 2022 we had estimated that non-energy imports in 2023 could be falling by 10% year-on-year, and all the developments that have occurred in the last two months are not enough to change this scenario, which obviously entails a marked adjustment in the level of activity” .
While waiting for official data on the new guidelines of the program agreed with the IMF, the study estimated that the relaxation of the reserve targets will avoid “failures” in this area by the time of the first quarter review. “However, this punctual event makes it difficult to broaden the horizon for economic decision-making in this electoral year. The external imbalances of the economy are a reflection of the imbalances in the macro, and what has been observed in recent quarters is rather a search for financing, but not for correction, of these inconsistencies”, the study remarked.
“In 2023, not only will there be a loss of possibly more than 13.0 billion dollars in the agricultural harvest due to climatic factors; there will be a negative balance in credit operations with agencies while, in external commercial loans, the figures of 2022 cannot be repeated, beyond what can be achieved in the negotiations with China and Brazil”, they added from IERAL.
“For this year, the fact that the IMF agrees to relax the reserve targets does not contribute much to expectations. The numbers of the external sector are so tight, that even when the reserve accumulation goal is only testimonial, in any case, there will not be enough foreign currency to finance imports of the level of those registered in 2022. The lack of inputs and parts has already begun to affect the operation of productive activities and there is no way to prevent this phenomenon from dominating the 2023 scenario,” the report concluded.
projections
When analyzing how the level of activity could evolve this year, after the EMAE registered an annual growth of 5.2% in 2022, the consultants that participate in the REM projected a real variation of GDP of 0%, reducing their forecast with respect to the value contemplated in the previous survey at 0.5 pp
In this scenario, the General Activity Index prepared by the Orlando Ferreres consultancy registered an annual growth of 1.8% in January and a contraction of 1.2% in the seasonally adjusted measurement compared to December. “It is worth clarifying that the measurement of the first two months of the year is subject to greater volatility than that of the rest of the year, so the drop in the first month is not representative of the trend we anticipate for the rest of the year, which is that of an activity with a slightly negative trend ”, they highlighted from the firm.
From Ecolatina they pointed out that “one of the main factors that will negatively impact GDP will be the drop in the volumes of agricultural production as a result of drought and frost.”
Source: Ambito
