Friday, November 26

The semaphore of the Argentine economy before the elections


The specialists consulted by Ámbito coincided in highlighting the rebound in economic activity and, fundamentally, in some specific sectors such as manufacturing or construction, as the most positive aspect of the current economic situation.

Leandro Ziccarelli, a member of the Center for Argentine Political Economy (CEPA), firmly argued that the level of industrial activity, and employment in this sector, is the best the Government has to show. The specialist in finance and monetary policy highlighted that the industry is operating at the levels of the “pre-crisis” of Cambiemos, with net creation of registered jobs.

In line with this look, Laura Testa He stated that the industry data is “quite encouraging”, considering that the Industrial Production Index (IPI) recently had the best September since 2017, which leads to a rebound in employment. “The economy begins to run due to vaccines and the economic and financial injection that the Government has been giving in recent times,” he said in dialogue with this medium.

For her part, the economist of Avancemos por el Progreso Social (APPS), Luciana Romero, was inclined to highlight in the green part of the traffic light growth in construction and industry, which in September operated 19.4% and 6.2% above pre-pandemic levels, respectively. “The domestic market is reacting,” he said.

In September, all industrial sectors, except textiles, produced more than in the same month of 2019. In this context, the sector already has 36,000 more jobs than at the end of that year, when Mauricio Macri left the presidency. In terms of activity at a general level, the latest INDEC data showed that in August the economy exceeded the level of February 2020 for the first time, prior to the arrival of Covid-19.

So far in 2021, investment is 13% higher than in the same period of 2019. Also, in the last month there were more than 40 investment announcements for more than US $ 13,000 million.

Among these, the decision of the Australian company Fortescue to invest US $ 8,400 million to produce Green Hydrogen in Río Negro stood out. They also highlighted projects related to copper and lithium, also important in the framework of the energy transition at the local level.

“In recent days, many promises of Foreign Direct Investment were announced in sectors that are key for Argentina, such as energy. This would generate many jobs and would bring in the dollars that the country needs to continue growing its industry, ”Testa said in this regard, although he warned that promises still have to be fulfilled and that there will have to be an agreement between the Government and companies around the easing of restrictions to be able to withdraw dollars.

Romero also highlighted the progress of the investment but placed it in the yellow box since it is necessary to monitor the evolution of the interest rate and an agreement with the Fund that facilitates access to long-term financing.


Data from the Argentine Integrated Pension System (SIPA) showed that 50,700 more formal jobs were verified in August than in February 2020. However, the recovery is heterogeneous at the sectoral level; While sectors such as industry have more employment than at the beginning of last year, others such as restaurants and hotels are still more than 20% down in terms of employment.

In addition, they are still perceived problems in the private sector to generate employment; the number of private wage earners is 134,300 lower than before the pandemic.

In tax matters, the specialists agreed to place this variable at an intermediate level. Romero said that Argentina “is doing its homework” in the negotiations with the IMF. Meanwhile, Ziccarelli said that “although financing has become more dependent on issuance in recent months, the deficit level itself is low, especially if we consider that we had a second wave of Covid-19.”

However, the CEPA member clarified that the level of deficit “could also be seen as negative, given that, with the current poverty numbers, a more marked fiscal effort could have been made in the first half of the year.”

The figures indicate that in the first nine months of 2021 the primary fiscal deficit would close to 3% of GDP. The “post STEP” package would not change the deficit reduction trend much. What did set off the alarms was financing; Since October, the Central Bank transferred $ 385,000 million to the Treasury and the goal of financing via the market expected by the Ministry of Finance for this year will probably not be met.


One of the most worrying issues in the Argentine economy, as usual, is the shortage of dollars in the Central Bank and the constant pressure on the exchange rate.

“The reactivation of the industry generates a demand for foreign exchange that we do not have today. The imbalance between supply and demand causes the price of the currency to rise, ”explained Testa. The economist assured that the Government’s restrictions on the purchase of “greenbacks” prevented an “abrupt devaluation such as that perhaps could have been expected in a crisis like the one we are experiencing.”

However, he was concerned about the growth of the gap between the official and the parallels, which is currently around 100% in the case of blue and “unregulated” financiers. This reflects the devaluation expectations that the market has for the day after the elections, something that can also be seen in the high demand for dollar linked bonds issued by the Treasury.

Romero put inflation, the dollar and reserves among the most worrying variables. “The three are related because if the limited level of reserves generates a devaluation of the peso, that implies an acceleration of inflation. All this occurs in a context of inflationary expectations and portfolio dollarization, which are common behaviors in election years in Argentina ”, he developed.

  • Inflation, poverty and wages

Inflation is another of the most difficult issues to solve in the country. In October, prices rose again 3.5%, already climbed more than 40% so far in 2021, and are on their way to registering their second highest increase since 1991, behind the figure for 2019. This impacts wages, which Although they have been improving slightly in real terms, they are still a long way from recovering what was lost between 2018 and 2020, and in a poverty that remains above 40% and exceeds 50% in the case of young people.

“An inflationary inertia was activated that becomes complex to resolve. In November we will see if the freezing of prices in mass consumption products has any impact to slow down the increases even a little. In any case, I do not believe that this measure go to structurally solve the inflation problem, which is multi-causal and responds to factors such as the lack of foreign exchange and recurrent devaluations, energy and tariff issues, uncertainty, among others, “Testa analyzed.

“Among the negatives are clearly social indicators (such as poverty), inflation and the exchange gap. They are the three sources of problems that, to a large extent, are linked to each other,” Ziccarelli said.

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