high levels of inflation and one-year devaluation. The wholesale dollar is projected above $800 and blue dollar higher than $1,000. The nominality scares, but it is within the possible.
The future dollar, as of April 2024, shows us a price of $747, which implies an implicit rate of 233.2% per year. At first sight it seems high, but if we look back on what can happen with the arrival of a new government, perhaps we fall short.
Argentina shows a manifest exchange rate delay, which does not make the country competitive. Importers and exporters were trapped in the stocks.
Exporters have a derisory exchange rate, between withholdings and stocks they lose 50% to 60% of the value to be received.
Importers do not manage to enter merchandise, when they manage to enable it, what they import is paid between 90 and 180 days, with which they charge a future dollar at cost with a rate between 120% and 180% more expensive per year. They end up charging all these uncertainties and then some at cost. The story ends with imported products being sold for the value of the blue dollar.
If exporters are left out of the market because there is no profitability, and importers, faced with a shortage, raise the prices of imported products, the result is a recession, with inflation and a lack of dollars that ends up affecting the electoral possibilities of the ruling party.
The political scenarios are beginning to be decisive for making economic projections. In opposition is the proposal for the dollarization of the economy, which makes a great contribution to the general confusion. Dollarization is not a starting point, it would be more reasonable to debate and bet on an economic program that adjusts the relative prices of the economy, achieves budgetary balance and provides a legal and juridical framework for the new economy to later analyze whether is possible or not a dollarization of the economy. On the other hand, the contributions of economic ideas together for the change are not very clear, nobody knows if they will make a major economic adjustment, they will redefine the debt in pesos, they will remove the stocks immediately or how they will finance the transition between the assumption and the moment the harvest dollars arrive, which arrive in the months of March to May of the year 2024.
The incoming government will take office in December, it will find few dollars in the safe deposit box (reserves) and many commitments to face (the payment of imports for a whopping US$ 15,000 million has been postponed). Almost like a soccer club, the president who arrives finds the coffers empty, the debt for the purchase of players is very high, there are unpaid bonuses and television rights were taken into account. The only solution is to get a Maratea for the Argentine economy.
We must not rule out that the next government, when it comes to taking office, will have to take exceptional measures, such as a large devaluation, price adjustments in the economy, seeking a balanced budget and rate increases to contain the rise in prices in the economy.
To think that inflation in 2024 will be lower than in 2023 is to think that the next government will apply a gradualist policy, something that is impossible to happen since there is no capital to finance said adventure.
From our point of view, inflation in 2024 could be higher than in 2023, because any relative price adjustment, change in the withholding rate, and adjustment of the exchange rate to real values will lead to inflation rates higher than the 200%.
The next government will have, first of all, the social challenge since it has to revert high levels of poverty and indigence. Second, a fiscal challenge, since the fiscal deficit is currently higher than what we had during the pandemic. Thirdly, a growth challenge, Argentina shows no increase in productivity, this implies that the conditions for very significant long-term growth are not present. To reverse this low productivity, Argentina must manage to attract investment within a framework of less taxes on productive activity, a competitive exchange rate and offer investors clear long-term rules that allow them to earn money, something that many politicians do not dare to do. to say.
conclusions
. – We should not be surprised that, in the next 12 months, inflation climbs to levels above 200% per year, the wholesale dollar can reach values around $800 and the blue dollar exceeds the $1,000 barrier.
. – All of this is manageable if the government makes a harsh budgetary adjustment and takes measures of a social scope that temper the shock of measures that are put in place as of December.
. – There is no entry of significant dollars into the economy until the months of March to July of the year 2024, therefore, the next government must obtain foreign support to achieve a financing bridge until agricultural exports are carried out. It should be remembered that, for dollars to arrive from the 2023/24 harvest, from August onwards, it should rain in Argentina.
. – Many are surprised when the figures of a possible inflation of 200% per year are released, or a wholesale dollar of around $800 and a blue dollar above $1,000, but the nominality of the numbers should not surprise us. What is worrisome is the inheritance that this government is leaving, whoever wins will not be able to make a gradualist plan, it will have to be a lightning plan, which materializes in the first 100 hours, not in the first 100 days.
Source: Ambito
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