Editorial: Luck Alone Is Not Good Enough
The government is lucky. Last week soybean price touched USD 565 per ton, the highest record since November 1, 2012. At that price, soybeans are only 14% from the maximum of USD 650 reached in September of that year. Clearly, this is very good news for Argentina and for the government’s chances of keeping the economy afloat until the elections. At the climax of resolution 125 of 2008, soybeans were worth USD 609, 8% more than now in nominal terms or around 30% more in real terms. We are not that far. The tailwind is rounded off by a recovery that may be more robust in some major trading partners. The activity data for February in Brazil, added to the price of soybeans and the appreciation of the real also help on that side.
Soybeans and Record Tax Pressure Lead to a Deficit of 4% Of GDP
The first quarter of the year ended with fiscal revenues growing at 55% annually and with (primary) expenses growing at 42%, and a primary deficit that represented only one third compared to the 2020 (0.2% vs. 0.6% of GDP). Even considering that the last two weeks of March were hit by the mobility restrictions, the fiscal dynamics at first glance are auspicious. What do we expect for the rest of the year? Spoiler: soybean and luck.
Economic Activity in Zigzag. February Was Weak, March Got Better
February broke a nine-month streak in which economic activity was recovering, but had not yet reached pre-pandemic levels. Indeed, the monthly economic activity estimator (EMAE, a kind of monthly GDP) contracted 1.0% monthly without seasonality, in line with our early estimate of -0.9%. And although the February data brought the economy 2.6% below its level a year ago, just before the quarantine began, not every stumble is a crash. In March, everything points to the economy growing again. In the coming days, more data will be known that will allow us to have an early estimate with our nowcast for the next report.