The economy is leaving the accelerator for the second half

In the first quarter of 2022, the economy is accruing a year-on-year increase of 6.1% of GDP. Between now and December, and despite the fact that the Government hopes to close the year with steady growth, private economists expect that there will be a slowdown in activity that will bring GDP to a small expansion of approximately 2%.

The parate will come from the hand of greater barriers to imports, higher cost of Energy and decrease in consumption due to increasing inflation. Thus, only the effect of the statistical drag after pushing an economy to rise 10.1% in 2021 after the pandemic and the quarantine, will save the overall product from going red this time.

The Survey of Market Expectations (REM) reviewed by the Central Bank monthly still maintains a projection of gross product increase for the year of 3.5%, with inflation of 65%. But just as data from the Consumer Price Index for April led consultants to set the floor for annual inflation at 70%, growth expectations were also limited.

For Equilibra consulting firm, the year closes on expanding by only 1% and an inflation of 72%. In recent weeks, the team led by Martín Rapetti and Diego Bossio has corrected their projections slightly upwards. “We were around 0%, but we corrected it mainly because the yield was better than expected, because the drought did not affect the crops as expected, ”they indicated.

“Our calculations show that if the economy stays at zero growth over the next four months, it will grow by about 4%. The month of March continues some of the symptoms of fatigue we mentioned in month of January. For the year we expect a slight economic growth“said the ACM.

From FMyA, Fernando Marull pointed out that although in April activity recovered after the collapse of previous months, “in the next few months it will loosen by 1%, so the GDP of 2022 will increase by only 3%”. This suggests a “1% fall in the coming months, due to the current statistical drag of 4%”.

From the LCG, based on inflation of 6.7% in March, they estimate a new drop in activity for Aprilwith a significant decrease in terms of consumption.

Consumption represents an average of 70% of GDP. “With inflation accelerating, this variable will hardly be the engine of growth during 2022; especially in a context where wage increases are rapidly diminished by price increases, ”LCG said.

The difficulty of the Central Bank in increasing reserves – it is almost not pocketed US $ 870 million so far this year – could be a further brake on the economy. For LCG “it can also contend with the oversight that BCRA must take on imports to meet the purpose of accumulating reserves. Exports will end up determining the volume of imports ( excluding fuel), and therefore the dynamics of activity.

Guido Lorenzo’s consultant added that investment, the third engine that often drives the economy, faces its own restrictions. “Investment cannot be a driving force which will pay for the slowdown in private consumption, given the situation of higher inflation, visible imports and the political uncertainty that accompanies discussions within the government coalition. ”

“Lastly, within the framework of the agreement with the Monetary Fund, the fiscal impulse will be limited,” the LCG concluded.

In this scenario, “we expect a slowdown in activity towards the second half of the year, resulting in average annual growth of no more than 2% in 2022. However, most of this ‘growth’ (accounting) will address the statistical drag left in 2021, so almost invisible to society as a whole“.

AQ