From his account on the social network Twitter, the official maintained that “Cavallo analyzes numbers of the current economy without even mentioning the main data, the historical drought that the country is suffering and that took more than 20,000 million dollars from us this year.”
The crossing of José De Mendiguren to Domingo Cavallo
The head of the industrial portfolio criticized a column that Cavallo wrote on his blog and in which he stated that “Hyperinflation may be avoided, but stagflation is becoming more apparent and tending to worsen.”
De Mendiguren pointed out that “indeed, Cavallo writes 1,436 words and none of them is the word drought”, to later wonder “How can it be that he omits the drought? One of two: he is a very bad professional or he is a bad-intentioned person. Perhaps both are true.”
The Secretary of Industry continued stressing that “in any case, I am going to explain to Cavallo the elephant in the bazaar that he did not see or did not want to see. Despite the drought, GDP grew 1.3% in the first quarter of the year, when the drought hit.
In April, general activity fell, as expected, but agriculture explains 90% of this drop and if agriculture is excluded, the production of goods and services in April grows 0.7% year-on-year.”
Later, de Mendiguren indicated that “it is unusual that a renowned economist like Cavallo does not see or hide that the drought is equivalent to a quarter of our annual exports, two years of energy imports and seven years of all our mining exports.”
Then the official said that “even with this, with drought and everything, in the first quarter the industry grew 2.5% year-on-year and reached the highest level in 5 years, according to INDEC, we estimate that the industry grew again in May and employment continued to grow in April and accumulates 28 months of consecutive monthly rise”.
Finally, de Mendiguren emphasized that “not everything is valid in the discussion. There are data and there are stories. Here are the clear data and even with the toughest drought in decades, Sergio Massa’s program complies with what he proposed 10 months ago, which is to sustain the level of activity and employment. Cavallo cannot or does not want to see reality”.
The impact of the drought on the economy
Last week, INDEC reported that the economic activity suffered a sharp contraction in April, falling 4.2% compared to the same month last year, a performance that reflects in particular the strong impact of the drought that caused a collapse of the agricultural activity and, by drag, also of the transport and the collection.
This is reflected in the Monthly Estimator of Industrial Activity (EMAE), in which it was also highlighted thatn April there was a decline of 1.9% compared to March, so the first four-month period of the year ended almost unchanged (-0.1%).
The Secretariat for Economic Policy indicated that the April EMAE “Fundamentally it reflects the impact of the drought, with the Agricultural sector falling -36.8% compared to last year and affecting transportation by -3.4% and collection by -5.9%.” He stressed that “Removing the impact of these sectors affected by the drought, the activity would have continued to show progress, with a rise of close to 1%.”
In the same sense of the analysis, the Secretariat highlighted the sector in rise as mining and hydrocarbons that grew 9%; industry and construction, 1.6%; hotels and restaurants, 3.7%, and commerce, 1.2%. “Overall, 10 of the 15 surveyed sectors continued to grow, which is consistent with the sustained process that we observe in job creation,” added the analysis.
Source: Ambito
