Gustavo Reyes wrote in his editorial for the Fundación Mediterránea – Ieral what are the economic predictions that are projected for next year. Although it seems far away, the current year is electoral and the prospects are mostly negative.

The inheritance for 2024

Although there was a rebound in the level of activity after the fall in 2020 due to the pandemic, the medium-term outlook for the country’s economy is far from positive. In per capita terms, the average income of Argentines (purchasing power) has contracted almost 10 points in the last ten years, compared to the advance of close to 20 points registered by the world average in the same period.

In this very complex 2023, the government faces severe limitations, both due to the lack of time until the elections, and the persistent deterioration of confidence indicators, key ingredients for designing and executing a plan that can put the economy on track and allow a return to sustained growth. The current program with the IMF and the redesign of the goals could barely, without full guarantees, prevent macroeconomic imbalances from spiraling to reach the year-end elections

Read more: Total basic and food baskets rose above inflation

In this context, it is about calibrating the economic inheritance that the next administration will receive, comparing with the end of 2015 and 2019 (last two general elections). For this, seven blocks are considered: the external context; the internal; the confidence of the markets; the distortion of relative prices; the potential factors of monetary issue; the imbalances in the external accounts and the private sector, and the strength of the Central Bank in the face of eventual negative shocks

In principle, it can be stated that the balance at the end of 2023 would be somewhat more negative than that of 2015, but much more complicated than that of 2019. For the 7 major issues considered, it is found that the situation of 2023 worsens that of 2015 by 3 items; in 2 an improvement is noticed, one is classified between better and equal and the seventh is indeterminate. Regarding 2019, the inheritance for 2023 is much more complicated, with 4 items that have worsened, only one looks better, another the same or worse, and the last one is undetermined

In Focus 1 – Maximiliano Gutiérrez

Inflation settles in the 100% annual level, despite key prices that continue to be repressed

The inflationary acceleration detected in the latest data generates complications for the management of the macro, regardless of the political significance of the return to the three-digit dimension in the year-on-year measurement. Among the inevitable derivations it is necessary to contemplate the expectation of an acceleration of the “crawling peg”, due to the lag of the exchange rate against inflation and, on the other side of that same “counter”, the perception of the need of the Central Bank to raise policy interest rates again, to keep them positive in real terms. While these variables adjust to the new scenario, instability may worsen

The variation of the CPI in February was 6.6%, accelerating by 0.6 points compared to January and, in interannual terms, the Index marked an increase of 102.5%, %, in a context in which key prices such as the official exchange rate and utility rates

Also: Prices through the roof: in the month of February they rose 7.54% in Córdoba

At the start of 2023, the jump has been very significant for the so-called “core inflation”, which went from 5.4% monthly in January to 7.7% in February. The division with the highest increase in the month was Food and non-alcoholic beverages (9.8%), worrying for the number itself, but also for its dynamics, accelerating from 4.7% in December 2022, with its consequent impact on the lower income strata

The products that are within agreement programs between the State and the business sector for February represented 3.2% of the total prices surveyed in the GBA, since they are channeled through super and hypermarkets, but not in retail stores. closeness

March is usually a month with higher inflation due to the adjustment of Clothing due to the change of season and of Education due to the start of classes. Likewise, for this month more adjustments are expected in regulated: private schools (16.4%), prepaid (7.7% for those who receive net income above ARS 392,562 and 5% for those who have salaries below said threshold), fuels (3.8%) trains and buses (6%) domestic service (4%); Gas increases according to user income will be between 39% and at least 50% for those with greater resources; in water the increases according to geographical area will operate between 15 and 20%