“What he is doing Sergio Massa it is doing things reasonably well and then being able to really discuss the important issues. So, raise the rate to improve the demand for pesos, make these exchange rate splits that are important to accumulate reserves because you have to comply with the agreement with the IMF and because if there are no reservations, people panic”commented Javier Timerman of Adcap Grupo Financiero.
He noted that “it is reducing spending and is at least trying to stop inflationary inertia with price agreements. Now, all this is not enough in the long term if a medium-term plan is not made that also involves a possible opposition government, or a possible opposition plan”.
“The IMF’s support for the economic authorities is striking, given the heterodox nature of its measures. It is that, faced with a desperate situation, it can offer modest partial improvements and prevent the entity from being linked to a serious outbreak in the midst of a delicate international context,” said VaTnet Financial Research.
“We will be attentive (to the result of the bidding), in addition to the net financing with which November closes in a challenging last two-month period from the fiscal point of view, at the level of validated rates,” said the SBS group.
“It is a miracle that inflation does not continue to rise (…) Argentina needs very deep reforms,” said Nicolás Dujovne, former Minister of Economy in television statements.
The risks that Argentina faces
“The inflation problem continues to be of a much higher magnitude in Argentina than in the economies of neighboring countries. So far this year the local rate is 5.9 times higher than that of the region (median value ), a gap that becomes larger with some countries, for example, reaching 8.7 times when compared with Bolivia or Ecuador and 7 times with Paraguay,” said an IERAL report.
“The conservative investor goes to dollars, and those who dare to assume a little more risk point to corporate debt, According to the issuer, there are attractive returns ranging from 5% to 10% in dollars. Therefore, they are seen as a refuge for the moment,” said Portfolio Personal Inversiones.
“The fiscal strength of Argentina’s regional and local governments will deteriorate as economic activity slows, which will reduce revenues for many of them,” estimated a report by Moody’s Investors Service. He added that “at the same time, growing social demands amid falling purchasing power, high levels of poverty and unemployment will push regional and local governments to increase spending in the next 12 to 18 months.”
Macro outlook: the positive data
“The incipient fiscal adjustment is a good sign for inflation expectations, since they allow moderating the central bank’s assistance to the Treasury,” said Lautaro Moschet of the Libertad y Progreso Foundation.
“However, it must be taken into account that it falls mainly on people, and in particular, on retirees, who are already on the poverty line,” he added.
“Although public investment accelerated in the last two months, it will be slightly below the level of 2021 and clearly lower than the average of the last eight years,” estimated a report by the Mediterranean Foundation.
“The main challenge for the Government in the electoral year (2023) will be to manage the pressures to continue granting transfers to the most vulnerable sectors in the face of the commitment to reduce the primary fiscal deficit within the framework of the agreement with the IMF,” said Ecolatina.
“In October, for the second month in a row, the outflow of foreign currency from tourism fell. November would continue with the same trend”argued the economist Santiago Manoukian.
“Investors are excited after the announcements from the United States Federal Reserve, after the inflation data was better than expected, and which opened up the possibility of slowing down the rate hikes and even of adjust 50 basis points at the next meeting in December, after four increases of 0.75%,” said Mauro Natalucci, an executive at Rava Bursátil.
He noted that “however, the increase in COVID-19 infections in China keeps the market on alert. The outbreaks put a limit on the positive expectations that the Asian giant finally begins to ease its restrictions.
“The global risk outlook recently improved, however the full impact of monetary policy on economic activity remains to be seen,” the Balanz brokerage reported.
Source: Ambito
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