Sunday, December 5

They assure that the price freeze is a “natural response to fear” of inflation

Fracchia added: “the economy is always in dialogue with politics, so the context close to the November elections with the well-known result of the PASO, influence the (monetary) issue that is being given to recover votes. This situation it influences inflation, the price of blue and the general uncertainty of the markets. “

He said it when conducting an analysis of the internal panorama and how the political crisis conditions an economy with more than 10 years of stagnation and inflation. “A united, modern and central Peronism that works 7 out of 10 is unbeatable in the dark room, now it walks 2 out of 10 and, like this, it got 30%”, He assured.

“Voters want to hurt the ruling party, which in general they have lost in the pandemic years; societies tend to punish the ruling party in those situations (such as Covid-19,” he said.

The director considered that “a devaluation in the first half of the year is possibly inevitable, which may be orderly or chaotic“; while predicting that “Consumption will not increase because the real wage is very deteriorated, investment is declining and exports, although they may improve, are insignificant in GDP.”

Regarding the policy of freezing prices, Fracchia considered that “establishing price limits is a natural response to the fear of an acceleration of inflation as a result of the monetary issue. It is a resource that has been used historically. I expect few results with this measure, after the first very short-term effect; economic theory is generally very contrary to this type of policy. ”

On the other hand, Fracchia, together with Martín Calveira, Researcher at the IAE Business School, observe that the INDEC poverty and indigence indicators argue an unfavorable panorama on the living conditions of Argentine society in general.

“A first approximation is that this derives from the great economic contraction of last year after the shock of the pandemic and, almost at the same level of causality, the health management of the national government, which first resulted in an excess of confinement and then in a late administration of vaccines ”, they pointed out.

October Economic Report

In the October edition of the IEM, Juan José Llach, emeritus professor at the IAE Business School, analyzed the international economic context, strongly affected by the health crisis: “The IMF’s October global projections accentuated his optimism, except for Latin America. The impetus was given, as always, by emerging countries. The world would grow 5.9% this year, recovering the fall of 2020. For its part, the global GDP of 2021 would be much higher than that of 2019 and would increase 2.8% in the triennium 2020-22 ”.

Llach remarks that, despite the adjustments with the IMF, Argentina’s fate is not so optimistic, growing zero between 2020 and 2022, thus being one of the countries with the worst global performance, although with very slow growth in almost all of Latin America.