2023-12-20 16:21:00
In the very high office of a executive of one of the 10 companies that invoice the most in the countryyou can see the Río de la Plata and the lead gray clouds that have not yet left Buenos Aires following the climate disaster. “Defense of the law”“private property” “normality for doing business”son some of the words that are most heard to define fears of the private sector for social actions that, ultimately, put the business climate at risk.
In Argentina at the end of 2023 there is no shortage of economic concerns. Nobody dares to project it how much inflation will be in December but, without a doubt, it will be the highest month of the year and probably the deadliest month in the last 30 years. The American bank JP Morgan did make a forecast. He predicted 60% inflation for December and January and a drop in the activity level of 3% by 2024.
Inflation accelerated due to the devaluation: consultants place it above 30% in December
The inflationary dynamics of December are not encouraging but what is expected for January or February, does not improve the horizon either. There was a 37% increase in fuel, to name just a few examples. Shell started with that percentage, when the Fair Prices agreement that placed a monthly cap on increases during the previous administration was annulled. Then, the state oil company YPF joined the increases in fuel prices of private companies and its service stations woke up this Thursday with increases of up to 37%. The latest increase is in addition to the 30% update that the oil companies had made last weekend.
The brand new president of the company, Horacio Marin, emphasized that will turn YPF into “a large crude oil exporter” and that will make the LNG project a reality. “If we achieve that, we will contribute to changing Argentina with the income of foreign currency and the promotion of economic growth,” he said in a message to employees.
However, at present it is known, Each increase in fuel prices has entirely repercussions on the rest of the economic chain. The Minister of Economy, Luis Caputo acknowledged that the increases at the pumps will continue at least until March. “An adjustment of this magnitude practically affects the whole,” he accepted in statements to the press and specified that although the first increases are voluminous, according to him, they will take an increasingly lower path until March.”
First test for Caputo: how the discount letter that the government puts out to tender this Wednesday works
Another factor that adds combustion to prices is the immonetary issue pact that the current government announced it will cut. Lautaro Moschet, economist of the Freedom and Progress Foundationor argued that “Living in a scheme of exchange rate delays and price freezes, combined with the mega monetary issue, which multiplied the pesos in circulation by 5 in the last 4 years, is unsustainable. Therefore, rearranging this mess will have a very strong impact on the CPI during the first months, but it is a necessary condition for the economy to function correctly once more.”
The Government admits that there will be double-digit inflation indicators in the first quarter and, probably until June. The technical teams calculate that, only due to the electoral monetary issue (which falls on the previous administration but which continues to affect the economy in terms of inflationary inertia) only between January and February there will be 20% inflation to which the impact of the rearrangements that already began to occur since December 10 with the government change.
But In terms of inflation, there is also a bet that the monthly indices will reach single digits by the end of the year.; there is even some very optimistic projections that predict the end of 2024 with between 3% and 4% monthly inflation. The economic team prefers not to put it that way in front of public opinion because they fear the remake of the “second semester” in the Macri era.
LR
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