The blender plan and the deep recession worsened again in March fall in both deposits in pesos and loans in local currency. In both cases, the collapse is close to 40% real compared to the same month in 2023.
According to official data from the Central Bank, total deposits in pesos from the private sector grew 7.9% compared to February. If an inflation estimate of close to 12% is taken, as predicted by various consulting firms, this implies a monthly drop of 3.6% in real terms.
Thus, they chained their eighth consecutive month down and in the last twelve months they accumulate a real collapse of 39%. The magnitude of the fall is explained by the official decision to liquidate all the pesos in the economy to, at some point during the year, open the exchange rate.
As the officials of the economic team and President Javier Milei himself reiterate, the objective is to reduce to a minimum the stock of remunerated liabilities of the BCRA, which have as counterpart the deposits of Argentines, especially the fixed terms of savers and companies. Thus, from the beginning of his administration, a interest rate decline cycle to leave them in super negative territory and liquefy the purchasing power of money in a context of very high inflation. The rate cut could have a new chapter in the next few daysif the INDEC reports this Friday that the March CPI decelerated compared to 13.2% in February.
For now, despite the fact that the lowering of rates continued and the minimum interest rate for loans was eliminated Fixed deadlines retailers, last month there was a rebound of term placements. They grew 18.3% compared to the February level, which implied a real increase of 5.6%. According to the consulting firm LCG, this could be due to the fact that, although the reduction in yields continued, the monthly effective rate (TEM) in March was less negative than, for example, that of January, when inflation was still above 20%. . That is, it went from -10% real TEM to -4.5% between the first and third months of the year.
But this occurred after a string of falls so abrupt that In the interannual measurement, it maintains a collapse of 58.5% in real terms. “Even with the recovery in the margin of term deposits, the stock measured in real terms fell 43% since November and is at values from 21 years ago and the average term continues to be limited: just 53 days,” analyzed LCG.
In short, the monthly fall is explained by a sharp decline of 9.2% in real terms in deposits in demand accounts, which in twelve months have already fallen 29.3%. The predominant expectation among specialists is that money in savings accounts and checking accounts (unpaid) will continue to decrease in real terms due to the deterioration in purchasing power generated by inflation that remains at very high levels. Money market funds (immediate liquidity), 30-day fixed terms and dollars are the most likely destinations.
Meanwhile, private deposits in dollars grew 2.9% in March and closed at US$16,903 million. It was the fifth consecutive rebound.
Loans
Bank credit to the private sector is an indicator that gives significant signals regarding the dynamics of economic activity. And the March data reflects the deepening of the recessive scenario: loans in pesos fell for the fifth consecutive month, this time in all categories. The decline compared to February was 5.9% in real terms and in interannual terms, 37.5%.
In the case of loans to companies, the fall was 4.1% real monthly for both document discounting and advances. They accumulate a drop of 31.5% year-on-year.
But the fall was even greater in consumer financing (6.4% real monthly), in a context of sharp deterioration in the purchasing power of income. Compared to a year ago, the decline accelerated to 39.3%. In March, the Credit card operations sank 7.7% in real terms and personal loans fell 3.1%.
There were also sharp falls in mortgage loans (11.1% monthly in real terms) and pledges (4.9%). Overall, collateralized loans plummeted 53.2% year-on-year.
The reason for these numbers lies in the sharp recession. “To the problem of non-supply, in recent months there has been added drop in demand due to the collapse of activity,” said LCG..
Going forward, the consulting firm stated that “the demand and supply of loans would continue to be affected by the significant drop in activity and still high inflation.” And he concluded: “We do not expect a credit recovery throughout 2024.”
Source: Ambito
