Despite resisting in the first quarter, economic activity began to stagnate in April, and there is a consensus among the consultants surveyed by the Central Bank that GDP will fall by 3% in 2023 as a result of the historic drought. However, economists also anticipate that energy and mining there will be two sectors that will be able to “divorce” and end the year with increase in production and exports.
“Activity is beginning to show signs of exhaustion,” highlighted the latest report from the consulting firm Invecq, referring to the drop in construction and industry in May. They hope that the economy will have regressed that month because agriculture will once again show a “significant fall like April’s.”
From Invecq they highlighted that manufacturing production “endures” by some sectors, among which “Oil refining, coke and nuclear fuel” stood out. Also, the new indicator on mining production from INDEC revealed that the mining sector as a whole accumulates a growth of 10.7% in 2023. By the end of 2023, from Invecq they estimate a growth of between 10 and 15%
As for the reasons, Manuel CerdánInvecq economist, highlighted: “Both energy and mining are growing – and will continue to do so – due to an international context that favors them, investments that were made in recent years and are beginning to bear fruit, have tax and exchange benefits, as well as support prices (energy), which manage to isolate them to some extent from Argentina’s macro instability, and they were lagging behind sectors, due to the macroeconomic mismanagement that clearly disadvantaged them, so they still had a lot to grow”.
However, Cerdan clarified that they will not be able to stop the aggregate drop in activity. The reasons: “The impact of the drought, stronger in the second quarter, the inflationary acceleration, which particularly affects the sectors related to consumption, the critical situation of the BCRA in terms of reserves, which will result in greater restrictions, and a greater uncertainty and volatility ahead of the elections”.
Along the same lines, from the Abeceb consultancy they highlighted that together with the knowledge economy, mining and oil&gas will be the “most dynamic sectors that will pull activity”. Natacha Izquierdo, economist from the Abeceb sectoral area, explained why she believes this “decoupling” occurs between these two sectors and the rest of the activity: “They are very dynamic in their production, despite macro and import restrictions, they had strong advances in investments. Despite the brakes on Siras due to a lack of dollars, 70% is local spending, because they have developed local suppliers”.
By 2023, Abeceb estimates that oil&gas will end with an increase in cumulative year-on-year production of 6% for gas and 12% for oil, due to the advancement of wells in Vaca Muerta, and after a first half of record production. “The problem is not production, but transportation infrastructure, as this is corrected, production will remain high,” said Izquierdo.
For the case of the miningin Abeceb they estimate that will culminate in 2023 with a 3% increase in exports. Regarding the reasons, he explained: “We attribute it to international drivers that make it a good time to invest, with commodity prices at interesting levels. The macro is a restriction, but there are very good investment levels, lithium being the most dynamic, and the growing interest in copper. After 2030 there are going to be bottlenecks, so in order to have a supply, companies speed up projects now, because the degree of maturity implies that period”. In addition, he added: “For exploration there is access to the exchange market, so it is not expensive compared to other countries, and exchange restrictions are seen in production, but there is a decree that allows them to transfer a percentage of foreign currency.”
Massa interest
In fact, sources from the Ministry of Mining assured this newspaper that the axes that they will maintain so that mining activity can be sustained is to increase the level of exports, adding more companies to decree 234 that allows benefits. Today there are three mining companies and they anticipated that two will soon be added. In addition, they added that they will generate greater development mechanisms for local suppliers, with a new line of credit that they are working on.
In the latest interviews on C5N and Radio 10, the Minister of Economy, Sergio Massa, anticipated new projects for these sectors. “The goal for next year, if the people give us the chance to continue governing, is to go for an industrial gas plan, where we bid for the supply of gas with a safe price for our industry and SMEs.” In addition, he added that there is a project with Brazil to design a fertilizer plant in Tierra del Fuego, where the gas supply has already been agreed.
Source: Ambito
