Monday, January 17

Better prospects for a new year


If we take the aforementioned sectors, we can see it clearly: the production of household appliances had an upturn of 46.9%; consumer electronics 54%, mining exports 20; and the production of vehicles; 56.2%.

This anemic rebound also occurs in steel production, which will increase 4.8% in 2022 and had grown 31.5% this year. Construction in 2022 will have an improvement at a rate of 4%, and this year it had reached 30.2% and the production of pharmaceutical products, which in 2022 will increase by 4%, was halved from 8.9% in 2021.

The agricultural activity has heterogeneous perspectives: the sale of agricultural machinery will increase by 2.7 in 2022, contrasting with 14.4% this year and the sale of fertilizers will increase by 1.5 against 12.8 in 2021. Production Agricultural (valued harvest) remains stable in 2022 (+ 0.3%) against an increase of 28.4% in 2021, while soybean milling will grow 2.1% against 17.4% in the current year. On the other hand, wheat milling will have a better 2022 with 4%, recovering from the fall of this year (-3.9%)

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A challenged macro and the challenges of technological disruption

Argentine industries are faced with the challenge of managing a double agenda: that of obstacles, with high short-term uncertainty reflected in top exchange rate pressure, declining reserves and growing expectations of devaluation; in a framework of long-term structural deterioration that raises the challenges.

And the other: that of the catalysts, with the acceleration and confirmation of a new path in consumer preferences, the acceleration of the sustainability agenda, changes in spatiality, and in the world of work that impose the need to transformation and provide opportunities to add value.

The latest bills sent to Congress try to give some guideline to guide the productive activity through these challenges: the proposed incentives are not clear and, in some cases (Law of Automotive Investments, Law of Containers and Law of Electromobility, among others ) confuse the current challenges with the need to grant a strategic perspective, coordinated with the companies and credible.

The economy enters 2022 with political weakness and a challenged macro, with the authorities forced to make some corrections (tariffs and fiscal deficit), high inflation and modest growth.

The normalization of face-to-face activities and revenge consumption put entertainment and hospitality as tractors of a recovery from skinny pockets (although the Omicron threat challenges those who depend on inbound tourism). “COVID restrictions” and super stocks with low dollar wages generate captive tourists and sustain indulgence consumption.

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The interventionist bias provides opportunities for rapidly maturing spot investments and protects the market for sectors that are sensitive to imports. The sheet is short: restrictions on imports limit the development of some markets: they limit the diversity of models available, and give uncertainty in relation to some inputs.

Added to the import administration are the risks of the distortion of international value chains, with industries already affected by the chip and semiconductor crisis, as well as by cost pressure due to the increase in prices of diffused inputs: glass, plastics and steel, among others.

For those who depend on the National Budget, the signals are mixed. For public works, although the tenders are progressing at a good pace, payments are tense. On the tariff side, an average adjustment of 20% was announced that is not enough to compensate for the delay since the accumulated inflation in the last two years prevents a short-term normalization.

For oil and gas, the focus is on ensuring domestic supply, in the midst of a continuous discussion about the window of opportunity that Vaca Muerta has in the face of the acceleration of the electrification of transport and the energy transition. For oil, the differential is in the hands of those capable of exporting, although ensuring the Creole barrel. For gas, the Gas Plan is progressing favorably, even more so in a context of rising LNG prices worldwide.



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