A look at the economy, taken from latest report on central bank monetary policyHe says: “The growth of the activity would have stopped already in June and August, in a context of greater financial volatility and acceleration of inflation. And it is expected to worsen in the third quarter compared to the second“.
Mixed with references to private forecasts where GDP falls without turning in the second half of 2022 and barely picks a point next year, the BCRA’s description sounds quite similar to reality. That is, similar to a professional photograph, clean and stripped of the retouching and makeup usually used in the official laboratory.
Now, the comment of an economist once close to Kirchnerism: “There is nothing fundamental there that should surprise us. What else could happen when he commands a tax adjustment that makes headlines every day, With soaring interest rates and endless import constraints, plus 100% inflation suddenly shaking wages and ultimately hitting consumption hard? The following is data from a highly regarded consulting firm that also adds to the big picture.
One of them claims that after growing 6.8% in the first quarter, private consumption slowed to 2.1% between April and June and stood at 1% in July. Another, that in the same comparison the increases in sales in supermarkets fell from 3.5 to 1.5%. And the third, which has been in July since strong consumer tendency to stock upboth in supermarkets and wholesalers.
Statistics don’t lie
The cooling of economic activity it also appears in INDEC statistics on two key sectors: industrial production and construction. One point in common is that, in the eight months from January to October 2022, both recorded four negative and four positive records.
The result would be a neutral tie, were it not for the fact that the two had just flown in 2021: 15.8% industry and 30.9% construction, against 2020. Past, more sensational in numbers, the Government proclaims that in the reality that the population perceives; especially, in the increasingly low-income population.
As for the economic summer we speak clearly of the quantity and quality of work recovered or created after the pandemic and the scourge of the Kirchnerist quarantine.
Official figures show that by the second half of 2022, two million lost jobs had been revoked, a considerable number except 85%, or 1.7 million of them, corresponds to informal employees and self-employed workers. That is, unstable, precarious, poorly paid jobs and therefore less important in consumption.
An ACM consulting report adds the missing data and closes the circle: in the cumulative up to July, the average nominal salary of non-enrolled private workers, in the black, grew by 31.7%, which means it lost 14.5 percentage points against an inflation of 46.2%. An enormity added to another enormity: compared to December 2020, the loss rises to as many as 16 points.
It is obvious that this army of workers suffers from superinflation like everyone else, so to speak, but the fact is that they suffer from it with very limited firepower: they are around 9 million that do not enter parity and who do not even mistakenly think of the 131% that Truckers ask or the 94% that La Bancaria organized and praised Cristina Kirchner.
Social spending is not enough
Say it another way, they are not unionized, they lack unemployment insurance and they have never been on the list of injustices against which the CGT and uncompromising Kirchnerism usually protest.
Given such a working landscape, it is understandable why poverty is still alive and well, despite the mountain of money the government spends on social plans: 84% more than in 2020, from a budget that, already exhausted, has just been raised to 1.1 billion pesos.
From the same bulletin, the current levels of poverty are comparable to those at the end of 2007, that is to those of 15 or a decade and a half ago. Added to the mighty 42% that, measured in people, sings the Grande Buenos Aires, it illuminates the predictable conclusion that nothing very different will happen in the short term. That’s what it is called, unfortunately, living with inequality and injustice.
Against that wall a datum of the specialists consulted by the Central Bank collides and agitates the Government: it is stated that thanks to the fact that the accumulation of the first semester has more than compensated for the withdrawal of the second, this year the GDP would close with a rise of 4.1%. The problem is that, for these specialists, in 2023 the Gross Product would be stretched to 1%, which is equivalent to zero growth per inhabitant.
All too cold in space that needs to be activated to change the climate, foster employment and fuel expectations of better times. One of the but of the reality that annoys the ruling party is now focusing on inflation that outlines everything and which, according to analysts, is already projected above 100% per annum, double the forecast with which they started 2022..
The BCRA price index sample indicates 90.5% for 2023 and 66.8% in 2024 and, to the same extent, it seems that within two years there would be something like 60% that the Government estimated in the 2023 National Budget.
wherever you look, headwind fight for the recovery of lost wages and lost wages in a big way. And, at the same time, an economy that remains stagnant and subordinated to private consumption is clouding over and is losing weight; an economy that creates only formal employment from the state and little, if any, from the private sector.
In the meantime, it is time for continuous adjustments, to the extent of the agreement with the Monetary Fund or the way the rule of avoiding short circuits that could sink the anchor that, in the absence of others, Kirchnerism has today, dictates.
Hence the new 40% increase in buses and trains which will be added to 40% in August, to round up the 95% that closes the 40 months of frost. This is passenger transport whose movement, measured in tickets, it has grown by 150% in the past twelve months.
The removal falls on a huge number of users in the City and Greater Buenos Aires and applying it now is a way to remove it from the electoral field, in 2023. But even if it is assigned a limited fiscal effect, some will have an increasing subsidy spending. up to 90% and has just been expanded to $ 373.8 billion.
Much more complex, somewhat murky, is the case of the increase in electricity tariffs. The idea is to apply it to high-income families, but it is not entirely clear how many users fall into the category of those who lose their benefit and start paying the full rate.
The problem that is finally a problem of the Government jumps into the fact that 35% of the users of Edenor and Edesur have not registered in the register of the subsidized, a universe that goes beyond the 10% that was initially estimated and therefore anticipates towards two very complicated dimensions. The first, that losing the subsidy is equivalent to increasing the rates that reach 200%. The second, that 35% would actually be 45% if the entire province of Buenos Aires were taken instead of Conurbano.
We would therefore be faced with a very strong draw, politically contraindicated and doubly contraindicated if extended to natural gas. Concentrated no less than in the electoral heart of Christianity and the post that the vice president has decided to strengthen by all means, starting with national state resources inaccessible to other provinces.
The political framework means effort upon effort and, visibly, with no guarantees of sure victory. It is enough to see only the stumbles of the most different colors that the governor Axel Kicillof accumulates in a row.
In any case, and appealing to the tax hole argument, the IMF warns of the need to respect the commitment to tighten energy subsidies. Despite a first cut, in August they still grow by 72%, entered the one billion pesos area and are moving towards an expanded annual entry to 1.6 billion.
Work and storm front for Sergio Massa. More than what lies ahead on the long and winding road leading to the presidential election in October 2023.
Source: Clarin
