To reach this result, the external variables “were decisive since they had a strong drop and returned to negative territory, while local conditions improved on the margin, but nothing to celebrate,” the IAEF evaluated.
Local conditions stood at -93.6 points, with an improvement of 1.3 compared to April, although a deterioration of 40 points when compared to the same month in 2021.
In that month, the local ICF had reached the best value since the 2019 PASO elections, according to the report.
In May, the expectation of lower core inflation and, to a lesser extent, confidence in banks (increase in deposits in dollars) tipped the balance towards an improvement in local conditions, while country risk was the variable that fell the most in the Month of May.
The local financial conditions index has been operating in a zone of financial stress for 44 consecutive months: the last time it was in positive territory was in August 2018.
For its part, external conditions returned to red numbers, as was the case in March; thus, that month and May of this year were the only negative data since August 2020.
Among the variables that fell in May, US stocks, commodities (increased volatility) and the greater risk of emerging countries stood out, the IAEF pointed out.
The entity also considered that although the war in Ukraine and the rise in rates in the United States worsened the external index, “they did not tarnish an immense improvement compared to the minimum of the pandemic, while at the local level the improvement was essentially testimonial and after having restructured the debt, something that generally gives financial air”.
Source: Ambito
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