Last year the economy grew by about 5% and there was a strong expansion in consumption, despite the fact that purchasing power decreased due to rising inflation.
For this year, the projections indicate it the economy risks stagnatingjob creation will slow down and consumption will cool.
A report by the consultancy firm Equilibra states that in 2022 economic activity grew by more than 5% annually and had one of its most dynamic components in private consumption, with an increase of more than 9%.
This happened despite the fact that the formal salary has decreased -slightly- in real terms and therefore accumulate five years without growing.
If purchasing power has deteriorated, what has driven private consumption? to balance “the answer is employment”. Last year, the number of registered wage earners increased by 4%, the number of informal wage earners increased by more than 15% and self-employed by around 1%.
The consultant specifies that taking into account all types of employment, total jobs would grow 6% in 2022. Formal paid and unpaid jobs increased by 3% a year and informal ones by 13%.
“The recovery in employment is very significant: jobs adjusted for population growth are 1% higher than in 2017, when private consumption peaked. Furthermore, there has been a double change in the composition of the employment relationship, towards greater “autonomy” and, within the world of wage earners, towards greater informality”, explains Equilibra.
This growth in employment compensated for the loss of purchasing power and allowed consumption to grow even as wages fell due to rising prices.
“Mass labor income (paid job position) grew by 4.6% in real terms in 2022. This figure contrasts with the decline in real wages and explains the strong expansion of private consumption”, says Equilibra. “Last year the propensity to consume or save in families increased”.
That dynamic will cut short this year. “By 2023, we expect a brake on employment and wages to match inflation. In order for private consumption not to stagnate, it would be necessary to appeal to other drivers: subsidized loans, the use of savings or transfers from the tax authorities, read “electoral push”.
low consumption
Other surveys already show that consumption is slowing down. The consumption indicator (CI) of the Argentine Chamber of Commerce (CAC) showed in January a seasonally adjusted decline of 0.3% compared to December (i.e. discounting the usual seasonal effects of consumption throughout the year).
Although in January consumption showed a progress of 5.5% compared to the same month of 2022, they failed to reach the pre-pandemic values: it is 0.3% lower than in January 2019.
This year is expected “a new fall in the purchasing power of households as a consequence of the lack of economic dynamism, inflation that would remain at high levels and a process of recomposition of rates still in progress”, according to the CAC report.
AQ
Source: Clarin
