This is due to the fact that multiple political scenarios are opened that in the end will be those that will define the possible economic strategies, all tied to hypotheses about the positions that each space adopts in relation to said electoral result, and From this it will emerge whether the country would move in this period towards a path of convergence in accumulated and postponed imbalances or, on the contrary, towards radicalization.
In this sense, the most beneficial scenario would be for both the government and the opposition to reach a consensus to design a comprehensive program that allows a negotiation with the IMF, which would improve expectations, and initiate a process of correction of fiscal and monetary imbalances. and exchange rates, although the willingness to share the political costs of their implementation will have to be seen.
On the contrary, a scenario towards radicalization – either by government decision or lack of cooperation from the opposition – it would be absolutely risky in terms of the dynamics of mistrust, which is already evident among the economic agents, and the long period that is still distant until the presidential elections.
This last alternative could be associated with a deepening of the fiscal deficit, its monetization and a further widening of the exchange rate gap. all under a dynamic of accelerating inflation that would make management very complex in the face of the delicate social situation that the country accumulates after a prolonged period of stagnation.
Given this, it is crucial that the political forces adopt a position of institutional responsibility – which at least temporarily puts aside electoral speculations – since otherwise imbalances would continue to incubate, and thus raising the risk that the country will regrettably move towards a new one. crisis.
To this complex domestic scene, An international context is added that little by little could become more challenging, especially for those emerging countries that have a more vulnerable profile due to their economic conditions.
Thus, the imminent beginning of the ¨tapering¨ by the Fed, a process that will begin to restrict liquidity in order to mitigate the rise in inflation, but that in the second half of next year would become a ¨tightening¨This is a rate hike process that could trigger a global appreciation of the dollar.
This dynamic is not at all friendly for emerging markets, since it generates a reversal of financial flows towards developed markets, higher financing costs, weakness in their currencies and pressures on commodities, the latter two risks being the ones that would most affect our country , inopportune in the face of the multiple challenges to face and counting only on limited domestic financing.
Source From: Ambito
