For the consultants, the slowdown in inflation and the last tender gave the government “air”, but the imminent outcome of the negotiation with the IMF will mark the pulse of the electoral economy. This week it will be known whether activity and employment can resist high inflation.
When there is less than a week left for the closing of lists, the former Frente de Todos -now Unión por la Patria- does not finish defining the candidate, nor if he will go to primaries or if there will be a single list. In the week leading up to this crucial date for politics, official data will be published on the future of the economy. The consulting firm Delphos Investment assures that the slowdown in inflation in May, the “good result” of the last tender and the notable increases in the Merval gave it “some air” to the Government, although he anticipates that Negotiations with the IMF were not closed. “There should be news on this front, which will surely impact the exchange rate gap and Argentine assets,” he says in his latest report.
After the long weekend, this Wednesday two important data are published. On one hand, the basic food basket and totalwhich is then used to measure the poverty, sensitive data that will be published in September, in the middle between the primaries and the general ones. The basic food basket would have slowed down in April, given that food rose 5.8% in May, 2 points below inflation. However, the basic basket of what a family needs to avoid being destitute climbed 121.4% in the last year, more than 10 points above the general level of the CPI.
On the other hand, also this Wednesday the INDEC will publish the commercial exchange, which will once again mark the low inflow of dollars as a result of the drought. Until April, the first four-month period showed a trade deficit balance of US$ 1,469 million, due to a 21.3% drop in exports. According to the LCG consultancy, in May exports were US$6.7 billion and imports US$7 billion, so there will once again be a deficit trade balance, around US$ 300 millionaccording to private estimation.
However, the latest situation report from Ieral-Fundación Mediterránea ensures that a part of the productive agricultural region “overcame the historical drought”, and advances with the sowing of wheat and other winter crops. The forecasts are positive, but only for the end of the year, according to Ieral: “The forecasts are encouraging, anticipating rainfall above normal, just in areas where the greatest lack of moisture is observed. The macro climatic context is mutating in favor of the country, one of the global phenomena that dominates the climate in the region, the El Niño Southern Oscillation phenomenon, would change its gender after almost three years, going from the Niña phase to the Niño phase. In the Niño cycles, the country has always had, at least in recent decades, good harvests”.
On Thursday, INDEC will publish two other key data: the level of activity and employment during the first quarter. They will show to what extent the “Maslaton theory” is true that there is a “silent economy” that drives activity and sustains jobs, even with record inflation.
In fact, the LCG consultancy estimates that there has been growth “exclusively due to the advancement of consumption in a context of accelerating inflation”. It is that, on the demand side, LCG analyzes that exports are falling. It would not have stimulated investment either, as a result of an “unstable political context” and restrictions on imports. Neither would spending, because “in a scenario of fiscal convergence, the traction of public spending would have been very limited.” Based on the EMAE data, in the first quarter, activity would have grown 0.85% seasonally adjusted, and by 1.5% year-on-year.
Also on Thursday the labor market report will be known, with the low unemployment data, the lowest in the last 7 years, one of the “workhorses” that will come out to count UxP during the political campaign. In any case, at the LCG consultancy they estimate an increase in unemployment, which could be around 7%, 0.7 points more than the previous quarter, although without interannual variation. “Although the activity reflected growth, which could translate into a greater demand for employment, it is in contrast with the probable increase in the labor supply due to the need of households to supplement income in a context of marked fall in wages real”, argues LCG.
Finally, on Friday, the day before the lists close, the INDEC report on the supermarket survey is published, which shows how the consumption of essential goods is coming, corresponding to the month of April. Until the first quarter, consumption in supermarkets grew 1.9% year-on-year.
Source: Ambito
