Ricardo Arriazu, one of the economists most listened to by the Government and founder of Arriazu Macroanalystyes, He said that, although the market insists on the need for a devaluation, Starting in February next year, the pace of “crawling peg” will begin to slow down that he Central Bank (BCRA) applies.
“If the exchange rate moves, prices rise. 2% is unacceptable for the market and I believe that, in February, it will apply a monthly devaluation of 1.8% and will bring it down to 1.2%,” he said, within the framework of the Argentine Insurance Summit and projected that, with this crawl rate, inflation will reach 0.9% in December of next year.
Arriazu said that The Government chose two anchors for its stabilization plan: fiscal and exchangewithin the framework of an anti-inflationary program, which seeks to realign relative prices, and which seeks to resolve the problems on the external front and then move forward with the structural reforms of the Argentine economy.
Price stability and job growth needed
Arriazu pointed out that this year is a mix between 2002 and 2010, with a recessive first part and an expansive second part. The analyst said that, “This year, the drought is over and there is an improvement of US$30,000 million in the balance thanks to that, which represents some US$13,000 million more, and to energy.” Likewise, he pointed out that Argentina has an opportunity in copper mining forward and that, If agricultural withholdings are lowered, production can be increased by 30%. He also sees great potential in the knowledge and tourism industry.
For Arriazu, those dollar income are essential because he said that “capital has not come to Argentina for a long time and that is an element key to country risk dynamics“. He explained that, From now until the end of the year, there are US$600 million left of capital maturity that the Government will face without a problem, but, he warned that, for next year, there are about US$11,000 million left and the Government has to demonstrate where it is going to get them from.
“Argentina has 120 years of decline and accumulated 19 of negative growth. We reached three times the world average income and, today, we have once that amount,” he explained. Thus, another topic that he touched on was that of economic growth and said that “price stability is needed and a boost in terms of employment” to energize the activity. In that sense, he recognized that population aging is an issue because it increases the number of retirees and decreases the population able to work.
On the other hand, he mentioned that “Politics has to stimulate the demand for pesos and that is done through trust“He said that it is key that the policy generates the necessary conditions and that it is not issued, for Arriazu.
Arriazu’s growth projections
Furthermore, he added: “Going to each of the sectors, employment has to grow. In Argentina, employment practically does not grow and there must be price stability, because, without price stability, everything that is assured is not known what it is.. “The vehicle fleet has to grow, there has to be a solution to the housing problem,” he exemplified.
He predicted that they will begin to see interannual growth rates only in October/November and, by 2025, it projects 5.2% growth in economic activitybut warned that “the risk is a political crisis or a bad economic decision made by the Government.” If all goes well, he predicted that “Argentina could grow 5% per year and that would be transferred to insurance.”
For Arriazu, let the sector grow, the economy has to grow. “If it advances by 1%, the sector will grow at 1%, if it advances by 5%, it will grow at 5%”, he anticipated, before an audience full of representatives of the insurance industry.
Source: Ambito
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