Economic recession plus fiscal adjustment


If the measure is the INDEC Manufacturing Production Index, the findings suggest that 2023 was the worst year for the national industry in nearly a decade. And if you prefer another way of looking at the same thing, we only had one month in 2019 and three months in 2020 with an average decline of 12.8% in December 2023, that is, a very modest four months above 96. Which is a resounding victory for what has passed since 2016 and the recession.

December 2023, that is, as a result of the conclusion of the last Kirchnerist cycle, finally resulted in a set of factory activities falling into the red, with much of it at or well below zero figures compared to December 2022. Among them, agricultural machinery accounted for 50.7%; 32.6% of steel industry; 31.9% in electrical appliances and equipment and 25.4% in base metals.

nor advanced production in many senses Food & Beverage Saved Argentina from shock. Driven by an 11.7% hit on beef and a 23.3% hit on oilseed grinding, The result marked a 7.8% decline and seven consecutive months of decline In an overall picture that reveals levels similar to October 2020 amid the pandemic.

There is nothing behind such data that cannot be seen or interpreted outside the script. According to INDEC explanation, there is a crossing of Difficulties in accessing imported inputs, i.e. endless stocks and scarce dollars and then, problems with payments to suppliers and obviously falling internal demand.

The point is that we are not talking about anything less than Industrial decline in Argentina is long established Which is tantamount to missing the train of development and progress and living a life with low quality, unstable and unproductive jobs and ever falling salaries.

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A strong fact of the problem: informal employment, without labor or social coverage and without the support of joint negotiations, has already reached about 47% of existing employment nationwide, as much as white work.

Another similar report, taken from the UIA report, states that, between October 2013 and October 2023, at least 68,573 formal jobs, both vacant and in sequence, were lost in the industry, compared to the million 300 thousand they created. Had reached the peak. action.

And which sectors have and are suffering from this loss?: First of all, textiles, leather and shoes, followed by cars and tires and then, chemicals and petrochemicals. The city of Buenos Aires leads the most affected areas; Behind them are the Buenos Aires suburbs, Mendoza and San Luis.

And how does the movie play out? In the short term, there is nothing to get excited about on the industrial horizon, according to the latest survey conducted by INDEC among businessmen in the sector.

Regarding domestic demand, 49.4% responded that it would decrease and 37.4% said that there would be no change in it, that is, they would remain depressed. Regarding exports, there will be a decrease of 23.8% and almost 60% without any change. As per estimates, 82.3% of employers do not plan to hire employees and 67% have ruled out increasing working hours.

Just so that pessimism doesn’t subside, now build statistics. In fact, they show the same or almost identical figures for industrial production: a 12.2% decline in December 2023, the largest decline since May 2020, amid the pandemic, and a 9% decline in the 12 months of last year.

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There are no differences with the industry even on short-term business expectations.

93.9% of those devoted to private actions believe that activity will continue to decline or remain the same as till now. The number of people engaged in public works is 97.2%. And projections on employment and working hours are along the same lines and highlight a common coincidence: There does not appear to be anything that looks like a bet on reactivation.

There are reactions that focus on general uncertainty, tax pressure, delays in state payments and, indeed, the lack of an anti-inflation policy that appears effective from a concrete perspective.

So, it becomes clear what has been very clear for a long time: that the government has to deal with an economy full of problems that will not be of its own making, that is what it has to face and for which it has to be equipped. Was Needed.

The Monetary Fund has already set a decline of 2.8% for this year, following the same indication of 1.1% it would have recorded in 2023., According to the latest survey conducted by the Central Bank with experts at home and abroad, GDP will decline by 3% and almost all of it will be concentrated in the first quarter.

If it needs to be clarified, the numbers just keep on increasing. Of course, some people are a little scared because of its horror.

This is the case with retail sales surveyed by CAME, the organization representing small and medium-sized companies across the country. The figures showed an average decline of 28.5% versus January of last year; They continue with 31.3% for electrical and construction materials, 37.1% in food and beverages and reach 45.8% in pharmacy products, that is, no less than remedies.

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Going back to the inflation and Central Bank survey, we have that only in July the price index will return to the single digit area: 8%, says the BCRA report. The January number is still a spicy 21.9% and for the full year it’s even spicier: up from 211.4% to 227% in 2023, or about 16 percentage points.

The picture speaks of stagnation with rampant inflation, also known as stagflation, creating noise where there is more noise, spreading uncertainties and affecting the most vulnerable social sectors. It also raises an inevitable question: If all this was foreseeable, why didn’t Xavier Miley arrive with a team and an armed plan that would have attacked stability and inflation from the start?

It’s hard to find something like this Luis Caputo’s speech and, on the other hand, a number of commitments with the goal of quickly achieving a balance in the public accounts And end the Central Bank’s inflationary financing, that is, in the way of commitments with the Fund and deep fiscal adjustment in line with what the market demands. After all, this is a world of money.

By the way, where does Caputo’s recipe for Miley to take provincial subsidies for public transit, which typically go directly to commuters with low incomes and unstable jobs, come into play? nothing new, A very classic fit.


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