The Economic activity recorded its first rebound in seven months in May: went up 23% thanks to the strong push of the field, which climbed more than 100% in the year-on-year comparison and managed to offset significant declines in the Construction (-22.1%), Manufacturing industry (-14.2%) and Trade (-11.4%). This data generated expectations for the future, although removing the good agricultural performancethe economy suffered a fall of 5.5% against May 2023.
However, specialists are mostly skeptical about the continuation of a path of growth. The Economist Martin Kalos He assured in dialogue with Ambit that what is observed in the data of the National Institute of Statistics and Census (INDEC) It is an economy that “grows at two different rates”On the one hand, there is the agriculturethe mining and the sector hydrocarbonwhich was already growing: “None of the three depends on the economic policies of Javier Milei“, he added.
On the other hand, there are the sectors that are more oriented towards the domestic market, which “are still falling and what can be seen in the latest INDEC data is that they have not yet touched bottom, which means we have great heterogeneity. We hope that everything that is in the domestic market will find a bottom in June.“But we do not see a rapid recovery going forward,” the economist explained.
June economic activity: what scenarios are being considered?
From the consultant Orlando J. Ferreres They overtook Ambit that the fall of the economy would be of 3.1% year-on-year in Junewhile in the The seasonally adjusted monthly series would be 1.2% below the previous monthThe new decline would contrast with the data for April and May, which showed a slowdown, and a seasonally adjusted monthly rise of 1.3%, respectively.
“With the data we have seen so far and with our optimistic forecasts, which are not even close to a “V” recovery, We see that the economy may fall even a few tenths less than in our base scenario of 3.6%. With this we say that unless there is some extreme event, the decline in activity will begin with 3″, the consultancy firm said. EconoviewsFounded by Miguel Kiguel.
In that sense, the manufacturing industry used only 56.8% of its installed capacity and marked its worst May since 2020, when the economy suffered unprecedented numbers due to the Covid-19 pandemic.
The manufacturing activity of SMEs fell 20.4% year-on-year in June and while in the seasonally adjusted monthly comparison gave in 3.1%according to him SME Industrial Production Index (IPIP) that elaborates the Argentine Confederation of Medium-sized Enterprises (CAME). Meanwhile, the Industrial capacity utilization fell by more than 10 percentage points to 60.1%.
Meanwhile, the Retail Sales Index (IVM) also plummeted 21.9% in the sixth month of the yearalthough in the Monthly variation advanced 1.2%.
Due to successive negative data, Martin Kalos He assured that the collapse of the economic activity “It doesn’t end when sectors stop falling”but from the current level of activity and with almost half of the industry’s capacity idle, the productive fabric is “unsustainable”, since, according to the specialist, there are businessmen who are paying salaries out of their own pockets and others are negotiating staff suspensions and salary reductions with unions to “try to maintain a cost structure that is not in line with the level of sales, which are collapsing.”
Without going any further, the GDP fell 5.1% in the first quarter of 2024 and forward the own International Monetary Fund (IMF) raised its projection of a downward trend in the economy 2.8% to the 3.5% in 2024 and it is projected that This decline is close to 6% without taking into account the agricultural sector.
“We still have not identified a clear driver that can drive significant growth in the short term.. We understand that uncertainty regarding the economic program and the exchange rate policy will still weigh on companies’ investment decisions. On the other hand, the recovery of real wages may drive some consumption in the immediate future, but it will be at the margin,” the consultancy emphasized. LCGwho also emphasized that the Government’s progress in fiscal surplus accounts that “will end up being contractionary in the short term”.
For his part, Kalos pointed out that if the productive crisis continues as it is today, there are many companies that will begin to close in the future, since “They cannot cope with these sales levels (-21.9% yoy) and the costs are not enough”which could lead to a most complex phase of the crisis which would be “the destruction of the productive framework and jobs work, which is then very difficult to recover”.
“In that case, there are two possibilities – the specialist explained – one is a greater drop in activity, because the people who were laid off lose their income and cannot consume what they used to consume before. But at the same time, part of what these individuals continue to consume will have an impact on greater activity in the companies that can continue, so perhaps the company that is currently working at 50% will start working at 70% of its capacity, because other companies have closed,” he said.
“So, What is coming is complex and the complexity of the problem will not be seen in a single number, but we may be destroying the productive framework in the future and that implies a greater complexity than whether we hit rock bottom or not“Perhaps the level of economic activity will not fall much further,” he concluded.
Source: Ambito
