“The next government is going to receive a perfect storm. Raise rates, cut the purchase of bonds, which will deteriorate long-term rates and which will affect the real estate market”, Etchebarne explained. The analyst considered that a global stagflation is likely, with a drop in activity in the United States, the United Kingdom and Japan. It is also foreseeable that once the war in Europe is over, the price of commoditieswhich will affect Argentina.
In this regard, a report by Inveq, the consulting firm of the economist Esteban Domeq, maintains that the financial crisis is impacting Argentina “mainly through the prices of commodities, which historically respond downwards to rate hikes in the United States”. “In the event that a drop in the price of commodities exported by Argentina actually occurs, the situation might be delicate”, agrees the analysis. The work details that the report on Prices and Quantities of Foreign Trade prepared by INDEC showed that the record exports of the first quarter of the year were mainly due to the price effect rather than quantity.
In the same way, Camilo Tiscornia, from T&C Asesores, pointed out that “the next government is going to have a more complicated scenario, because it has maturities and the world is heading towards a scenario of higher rates.” In the short term, he indicated that Commodity movements still do not affect Argentina because prices remain high.
For Econviews, by the economist Miguel Kiguel, and the Argentine Institute of Finance Executives (IAEF), there is also a risk of a global recession. “In the past, situations where oil went up a lot were associated with abrupt rate hikes and periods of recession”, indicate the consultant and the entity in their report on the Index of Financial Conditions (ICF). The report clarifies that “the current situation does not correlate perfectly with the oil crises of the seventies in the sense that raw materials rose less and that the world is much less dependent, but certainly there is a risk of stagflation”.
On your side, Ivan Vlassich, Analista de Research de IOLindicated that “following what had been a 2021 with outstanding returns and in tune with the change in policy by the Fed, the market seems to have taken a drastic turn in 2022 and now volatility has gained much prominence in the main New York indices”.
The large market operators are preparing to face a hostile scenario. Jean Boivin, director of the BlackRock Investment Institute, he said in a note to his clients that “there is little chance of a perfect economic scenario of low inflation and growth” and that the market crash “shows thatInvestors are adjusting to this reality”.