“The conditions are in place to grow back and that inflation will go down”. The phrase is one of the most responsible for the conduct of economic policy in the country and will have a key role for the chances of the ruling party in the elections. He believes that economic activity could resume an annualized growth rate of 3% and inflation in June be less than 3%. “The dirty work has already been done,” he confides.
That statement has a special meaning, looking at August 11, the Sunday of the PASS, a choice that does not formally define anything, but has become crucial, by the projections made of the numbers that are known that night.
After more than a year of currency crisis, mega-devaluation recession and inflationary spike, the government believes that it can reach the first electoral test better stopped than it imagined just a couple of months ago. That is, with the dollar calm, inflation decreasing and economic activity recovering slightly.
The change of mood in the official ranks has a precise date. On Monday, April 29, before the markets opened, it was announced that the Central Bank could intervene freely in the foreign exchange market. Financial summary: since then the exchange rate fell 7%, the country risk fell almost 200 points and the Stock Exchange rose 45%.
The surveys that are appearing in recent days seem to reinforce the vision that the Government is having. In the official offices, they also list the following list of information that has come to light in recent days. All optimists.
– Primary surplus of $ 36,896 million between January and May, a figure that represents an over-achievement of the goal with the IMF (stipulates a surplus of $ 20,000 million for the first semester). “This is the first time since 2012 that the national non-financial public sector has a primary surplus in the first five months of the year,” they say in the Treasury Department.
– Growth of the economy: it was verified in May after thirteen consecutive months of year-on-year falls. This was measured by the consultancy Orlando Ferreres & Asociados this week: that month there was a slight improvement of 0.3% compared to the previous year and 0.8% in relation to April. The Indec also published that the EMAE of April fell (1.3%), the lowest rate of contraction since the beginning of the recession. For the Government this means that recovery is just around the corner.
– Exports: Nicolás Dujovne says that exports will boost the recovery of the Argentine economy, for many something exaggerated if one takes into account that consumption represents about 70% of GDP. Only in May could the salary beat inflation. That said, during the week the Indec showed that Argentine sales abroad in May registered the biggest jump in new years, increasing 16.5% year-on-year and almost 35% in quantities. In terms of trade surplus it is the best start since 2012.
To the green shoots of the real economy, the Government adds a list of indications on the financial front. “They set up a starting point that helps.” They note that “a lot of the dollarization has already happened and there are companies that had to sell dollars to pay the income tax.”
In the ruling party know that the exchange pax has an expiration date. The time to test the mechanism of intervention of the Central Bank in the exchange market – approved by the IMF at the end of April – is approaching. With the STEP to almost a month, the probability that the price of the dollar will register a sharp jump increases. “It is difficult to rule out a possible increase in the hoarding of currencies at a time prior to the elections as it happened in other years,” economist Gustavo Reyes, of the Ieral Mediterranea Foundation, says in a recent paper.
The political scientist Ignacio Labaqui records that the government is acquiring a “momentum” that, if it retains it, can give satisfaction but in the PASO, most likely in the first round of October. “It is giving the polarization that I wanted, there is nothing left in the middle avenue,” he added.