Tuesday, May 24

The economy rebounded in November: what analysts expect for 2022

As published by INDEC, 13 of the sectors that make up the EMAE registered year-on-year increases in November. “The increase in Hotels and restaurants (+59.8% yoy) and Exploitation of mines and quarries (+20.4% yoy) stood out. These two sectors jointly contributed 1.1 percentage points to the increase in the indicator,” said the agency, which added: “For its part, Manufacturing (+10.6% yoy) and Wholesale, retail and repairs (+10.1 % yoy) were the sectors with the highest incidence: they added, between the two, 3.3 percentage points to the interannual variation of the EMAE”.

“The economy as a whole produced 5.6% more than in November 2019, and 3.4% more than in November 2018,” said Daniel Schteingart, director of the CEP XXI of the Ministry of Productive Development, on his Twitter account. who added: “With the data for November, the highest level of activity since August 2018 was reached. In other words, everything lost due to the pandemic has already been recovered.”

“Even with zero growth in December, the economy would grow an average annual 10% in 2021,” they analyzed from the LCG consultancy, adding that, “if real growth stopped towards the end of 2021, the economy would be 2% below than it did in 2017, the last year with growth”.

2022 Outlook

Yesterday, the IMF raised its growth projection for the Argentine economy for this year to 3% (0.5% more than projected in October). Consulted by Ámbito, different economists analyzed this forecast and carried out an analysis of what may happen with the activity in the country during this 2022.

“Something paradoxical happens to us in relation to the estimate of the Monetary Fund. Due to the drought and the heat wave that affected the country in January -especially-, we cut the growth projection. We see a stagnant economy in 2022. Precisely, because there are irremediable losses of around US$4,000 or US$5,000 million as a result of the drought, mainly due to corn and to a lesser extent soybeans. And there has to be rain in February (which is not the most likely because there is a La Niña weather phenomenon), so that these losses are not greater,” said Lorenzo Sigaut Gravina, from the Equilibra consultancy.

“The problem is that when the account is made in dollars, the Argentine economy is already fair: we have very low net reserves, there are many debt payments in hard currency (not only with the Fund, we also have to start paying the restructured debt with private). Product not only that a lower harvest means less activity in agriculture, but above all lower collection. When you are so tight with dollars, the only possibility is to restrict imports: if imports are restricted by 5% or 10% in volume, it is very difficult for the economy to grow in 2022”, added Sigaut Gravina, who remarked: “ In short, we cut our growth estimate: we had around 1% for this year, to almost zero. This, obviously, assuming that there is an agreement with the Fund that allows closer maturities to be rolled over, and that this prevents it from falling into default, increasing the gap, and causing the country risk to skyrocket. Something that would make the shortage of foreign exchange stronger and a more recessive and inflationary scenario.

For his part, the economist Jorge Neyro pointed out that “the 3% estimated by the IMF is relatively optimistic.” “Because December will probably leave a statistical carryover of more than 1.5% or so. So, 3% actually represents 1.5% of genuine growth,” said the analyst, who added: “Growth may be lower or higher depending on the agreement with the Fund, because clearly the agreement will condition fiscal policy and the government’s foreign exchange policy. And that has an impact on activity. And then, we have the question of the harvest: we still have to wait for the rest of January, all of February and some of March to see what the productivity of the harvest is like. And in general, if the world helps us with prices and with demand. For Brazil, the IMF forecasts growth of 0.6%, almost stagnation, which will also impact the demand for our products. That is why 3% sounds relatively optimistic, considering all the circumstances that have yet to be defined.


“The 3% of the IMF implies that the economy will average a production level during this year equal to that of the fourth quarter of 2021. From Analytica we project that it can reach 4%, because even consumption, investment and exports have room to grow a little more despite the fragile situation of the macroeconomy. For example, in sectors that are still below pre-pandemic activity levels, such as hotels and restaurants,” said Claudio Caprarulo, from Analytica, who added: “In any case, there are two yellow lights: the agreement with the IMF and inflation. The first, because we still do not know the fine print of what is being discussed and what its full impact may be. And, secondly, due to inflation, with 51% in 2021 and even higher expectations for this year, the economic team has to be very precise in coordinating the relative prices of the economy (rates, exchange rate, salaries ) to avoid validating another jump in price increases that would further limit growth. Obviously the low capacity to accumulate reserves and debt commitments for the coming years are a clear limit to expanding the activity not only for this year but also for several more.”

Finally, Nizolás Zeolla, from FIDE, pointed out: “We expect growth of 4.5%, with a scenario that includes an agreement with the IMF.”