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The negative consequences of the economic plan

The negative consequences of the economic plan

In our country, on December 11, 2023, a new stage of its administration began and we had two transcendental economic events: 1 – the economic-financial measures of December 12, which fundamentally established the modification of the exchange rate from $360 to 800 per dollar, and the paralysis of 2,308 public works throughout the country; and 2 – the validity, for now, of the Decree of Necessity and Urgency 70/2023 by which They freed the prices of goods and services throughout our economy, except for salaries that must be approved by the Ministry of Labor with the endorsement of the Minister of Economy who has already expressed that they will be done as long as they are less than monthly inflation.

During this past week the National Institute of Statistics and Censuses published the manufacturing production index or indicators of the different branches of industrial activity, the name they best express.

The important thing about this is that we can already notice the consequences caused by those first two measures taken.

The most scandalous thing is to see how the paralysis of 2,308 public works It is reflected in an interannual drop in construction against March 2023 of 42.2%, which is correlated with the drop in cement of 39.6% and asphalt/pavement of 64.4%.

When we verify a 25.2% drop in automotive products, it is precisely consistent with the 23.3% drop in rubber products, which obviously includes tires. This industry is more established in the central region (Córdoba, Santa Fe and Buenos Aires) already today. They have 1 of the 4 production shifts achieved until July/2023 suspended and with layoff prospects established among all employers close to 25%; as well as the drop in Machinery and Equipment of the order of 37.9%, including a drop of 24.3% in agricultural machinery, as has not occurred since the period 1999-2002. We must understand that this sector is mainly established between the provinces of Córdoba and Santa Fe, which today has a layoff rate of 1/3 of its workers.

Another indicator to take into account is that of tobacco production, which fell by 20.2% compared to March 2023, knowing that the producers are in the north of the country and the majority of the firms are cooperatives/SMEs and/or MSMEs.

All of these falls are a consequence of the liberalization of prices and consequently their dollarization, leaving not only falls in production due to over-storage of products but also the rise in prices of raw materials and inputs and consequently their sales price, which is why by lowering the Sales and production end up increasing unemployment levels and by not having income, poverty, which the President of the Nation himself recognized as greater than 60% in his last national network that announced the fiscal surplus of 0.2% in the first quarter of this 2024 .

Given that the Base Law which is in the Senate of the Nation for the opinions of the different commissions and then go to the premises, we must know that with points such as RIGI (in all its extension) + reimplantation of Profits to workers + reduction of Personal Assets + elimination of Monotax Social + elimination of workers in MSMEs + deepening of price liberalization schemes will generate a greater number of layoffs and a greater drop in national production due to ultra-concentration of smaller firms in large companies to be able to access the RIGI and stop paying tax to Profits with all the benefits and the reduction of Personal Assets would lead us, without almost fear of hesitation, to a great definancing of the country.

ECONOMIC ANALYST AND TAXIST

Source: Ambito

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