The lack of dollars, inflation and drought began to subside have a greater impact on companies. So, after a growing first quarter, the economy showed a brake in Aprilwhich could deepen in the months leading up to the election due to import restrictions and a possible exhaustion of consumptionaccording to private studies.
The indicators that analysts watch have started to turn red. Start, activity fell 3.8% year over year in April and 1.8% compared to March, according to Orlando Ferreres’ estimate. In his latest report, the consultant pointed out that “the numbers for agriculture continue to decline and its incidence in this period is higher”.
The lower activity is largely explained by the agricultural sector, where agriculture has plummeted nearly 50% year-on-year. But among the main sectors, the slowdown in the economy is also noticeable: industry contracted by 0.4% in April and trade by 0.8%, according to the report.
“For the coming months, we expect a similar trend, with agriculture leading the fall and the rest of the sectors cooler. second half of the year the uncertainty is very high and the future of the activity will depend on the evolution of the macroeconomics and on the definitions that are given in political matters”, indicated the consultant.
In the same line, FIEL registered in April a 1% year-on-year decline in the industry, according to preliminary information. Although the automotive sector posted its highest levels since 2014, food and beverage production fell again, although the biggest declines occurred in metalworking, chemicals and plastics.
Although the broad index showed a 4.5% recovery from March, the foundation warned that the industry does a “thrifty cut” of the activity, which will depend on availability of dollars. To halt the decline, Sergio Massa negotiates expand trade with Chinawhich only applies to imports from that country and aims to unlock funding from Brazil.
But the shortage of foreign currency led to more restrictions on overseas goods, cars and oil companies in May. “With an extension of terms in the SIRA, without smooth access to foreign currency and with limits on external borrowing of companies, a deepening of the deterioration that some specific businesses are already exhibiting is to be expected,” FIEL said.
Worsening prospects
The latest UIA survey of 477 companies shows that those in decline continue to prevail over those that have grown in production, exports, employment and domestic market sales. In the last case there were 42% decreases and 20% increases. Therefore, the indicator driving industrial activity was once again above fourth time in a row in the contraction zone.
On the other hand, 9 out of 10 companies have seen each other influenced by the currency run in April.
“In recent months, macroeconomic tensions have begun to play an increasingly decisive role in the economic situation of companies. The restrictions on imports and tensions on the foreign exchange market at the end of April have repercussions on the daily operations of companies, with growing costs and increasing pressure on the supply chain,” the UIA said.
Looking to next year, that’s expected some improvement in prospects, although they are still at low levels and the companies that expect a worse situation prevail. Another key indicator for the coming months is investment, which showed a 4.2% year-on-year contraction in April in terms of physical volume (not counting the effect of inflation), according to Ferreres.
“So while inflation discourages saving and encourages consumption, and those with the ability to stockpile, the process may be running low. In this sense, the prospects for the coming months are not positive, and we expect that the downward trend in investments will continuethe study center said.
For this reason, the consultants expect a decline in activity this year. “All of this would imply this activity would contract between 3% and 3.5% in 2023, with a first quarter of slight recovery that will not be maintained in the rest of the year. A sharp devaluation or sharp inflationary acceleration could accelerate the decline above 4%,” warned Delphos.
Source: Clarin
