Likewise, they indicate that The consumer segment shows a rebound in car registrationsbut still operating 13.8% below May 2023. “Even the table published by the president itself records a drop in car production of 7.1% May vs April (ADEFA). Additionally, if we focus on consumption of beef, milk and grass in April, the interannual collapse reaches 13.5%, 15.9% and 21.2% respectively,” they point out.
At CEPA they rescue that “the only data in green for the last two months of the foreign trade segment “Imports associated with intermediate goods and capital goods that support industrial activity plummeted 21.5% and 15.5% respectively in the first four months of Milei’s management as It is observed in the INDEC Commercial Exchange report.
And they mention that “the Government celebrates a 1.8% increase in the April IPI but it hides a year-on-year drop of 20% in said indicator.” In addition, INDEC’s industrial installed capacity utilization indicator in March is at the lowest level in the last 9 years (53.4%).
On the other hand, The 85% cut in public works in the first quarter of the year had a full impact on construction. The monthly comparison in April suggests a slight recovery (1.7%) from 37.2% lower Respect to the same month of previously year. And, in this same sense, the slight recovery evidenced by national cement shipments is achieved from a level 32% below 2023. “In 50% of the May indicators the fall continues while the other half finds a slight recovery from considerably lower levels than last year,” they say from CEPA.
Reality data excites the Government
For the economist Aldo Abram, director of Freedom and Progress, What the ruling party maintains has some basis in reality. “There is already data on economic recovery. In fact, in the latest Construction and Industrial Production (IPI) report, a monthly recovery is seen. Likewise, in the segment, despite the fact that there was a delay in the harvest, it began to recover since April, when they were able to begin to harvest the harvest after the weather problems. And there are other sectors, such as real estate, that are also beginning to recover due to the deregulation that was implemented,” he says.
Abram anticipates that, surely More positive data will begin to be seen in the Monthly Economic Activity Estimator (EMAE) for April if they are taken seasonally adjusted with respect to the previous month and explains that, although it is true that the interannual comparison is probably negative, “these indicators must be analyzed month by month to measure the recovery because Argentina hit the bottom of the well and the fact before it starts to come out, it is reflected in the monthly rebound.
In the same sense, the economist Federico Glustein mentions that “There are some indicators that, if analyzed seasonally, are much better than in previous months.“. One is the Industrial Production Index (IPI), which between March and April grew 1.8% and the other, construction, which rose 1.7%. Added to this is the soybean sector, which for the third consecutive time , shows good grinding rates. However, he warns that there are sectors that show better dynamics than others, but that The biggest and underlying problem is that “consumption is not growing and that makes one think that there are no strong symbols of recovery.”
For the economist and director of FIEL, Daniel Artana, We must wait for the official indicators of May and June for a more precise diagnosis, but he was distant from the optimism of President Javier Milei. “The fall of the check tax and that of internal VAT allow us to anticipate then that activity still does not rebound“, he stated publicly.
A V-shaped recovery that appears distant
Pedro Gaite, economist at the Development Research Foundation (Fide) states that, last month, some variables were seen that show an incipient rebound that could indicate that activity showed a slight rebound. “What happens is that these are very low levels. You have to think that the industry operates at 53% of its installed capacity. You could say that it shows a slight rebound, but I don’t see the conditions to talk about a V-shaped recovery because there are no clear drivers,” he mentions.
In that context, It is expected that the labor force will fall due to the decline in employment, not only the salary, and exports do not have the power alone to drive all activity. “Industrial exports are falling and there is a latent exchange rate issue all the time, but the problem is that a devaluation could harm this incipient reactivation, while, on the other hand, it would encourage the liquidation of dollars.”
For Sergio Chouza, director of Sarandí consulting firm, what the Government is pointing out as a recovery is “a logical and pyrrhic rebound of an economy that fell very dramatically and in which a certain respite linked to the fact that the nominal dynamics moderated with respect to last year’s parameters.” This, he indicates, caused some aspects of the economy to recover that were awaiting the macro results in the months previous.
He explains that the magnitude of the fall had been such that it is, more than anything, a symptom that the economy hit a floor due to the magnitude of the collapse that occurred in the first four months of the Milei Government and, now, it improves somewhat. “The slightly more positive data is a swallow that is not summer,” says Chouza.
An economy that seems to have hit the bottom
From this perspective, To talk about a recovery there is a long way to go. “Salaries must be recomposed, internal consumption must be reconstituted and there must once again be firepower in the wage bill to drive internal consumption to be able to speak of an improvement beyond a pyrrhic rebound,” he believes.
While, from the Center for Political Economy (CEPA)warn that “what the Government does not say is that the economy is functioning at a considerably lower level than in 2023” and point out that there are many negative elements that suggest that economic recovery is still far away.
What is needed for a real recovery of the economy
Glustein agrees that it is still early to talk about economic recovery, he believes that “you have to be cautious in that sense.” If this path can be sustained over time, a trend could begin, but he maintains that “purchasing power, consumption and other elements that remain unadjusted need to be recovered.”
For Abram it is not the time to claim victory either. “A recovery from a good harvest is not enough,” he warns. And he explains that we have seen this type of situation many times in which good field dynamics reflect better economic indicators, but are not sustained over time. “What matters is how strong it will be and how long the improvement will last. The key is to start getting out of the trap, with a rapid exchange rate unification, and the approval of the fiscal package, which is important to unify the exchange rate,” she clarifies.
Furthermore, for Abram, The Bases law is a step towards attracting investments for Argentina. “We were supposed to begin to change course with the approval of these laws, but we have not had any news in this regard. That is a negative fact that will hinder the recovery of the economy,” he predicts.
Thus, beyond the diverse ideological approaches that may exist in the market, there seems to be a consensus on the fact that It is still early to evaluate whether this sprinkling of some indicators with some improvement in the month are really symptoms of a recovery or not.. Everything indicates that there is still work to be done in political, salary and exchange matters to advance on this path and that the incipient numbers that the Government shows today are consolidated going forward.
The big problem is that Luis Caputo’s economic management is having a lot of problems getting dollars and maintains a slightly controlled macro by force of sticks (the recession, an indiscriminate cut in spending, the liquefaction and the lack of updated salaries) and with few, if any in reality, carrots (except for the promise of the RIGI and of lifting the stocks and the deregulation of some markets).
Source: Ambito
