Financial conditions improved in November for the first time in three months

The objective of this indicator is to summarize the state of the financial conditions that prevail in the Argentine economy, in order to have an easy-to-read indicator that identifies the way in which financial conditions influence the levels of financial and economic activity. In a very simplified form, the ICF seeks to reflect the availability and cost of financing for the Government, provinces, companies and Argentine families.

Local conditions sub-index

For its part, the local conditions sub-index stood at -126.2 points, an increase of 10.5 points compared to October. The local ICF grew in 3 of the last four months, although it remains in a severe stress zone. The local component of the ICF has been negative since March 2019 without interruption and has been in a stress zone for 45 months in a row. Seven of the 10 components improved in November while the other three worsened month-on-month.

Of those that fell, the only one with any significance was the expected depreciation. The other two had very slight falls, such as the interest rate and long-term liquidity. On the positive side, the two variables that performed best in November were confidence in banks, supported by the growth of deposits in dollars, and country risk, which fell significantly.

External Conditions Subindex

As for the external conditions sub-index, it went from -14.3 to -15.7 points, the second consecutive drop that now places it in a moderate stress zone, a place from which, given how December began, it does not seem like it will come out. Six of the ten components of this index worsened in November.

Emerging currencies, emerging stocks and confidence among banks were, in that order, the worst performers last month. American stocks, European risk and emerging risk were on the podium. The drop in emerging risk shows that the drop in country risk was not really an exclusively local merit, but rather was correlated with global factors.