I. Is there a way to turnaround the economy?
Inflation, the exchange rate, and economic activity are moving in election mode. The government is using all its firepower to keep the main economic variables under control. Inflation, which had reached 4.8% in March is now hovering at around 3%, the official exchange rate continues to crawl at only 1.2% per month, much lower than inflation, while economic activity is slowly picking up pace as evidenced from the recent published figures. So far so good, but the flipside of these outcomes is the build-up of imbalances that will be costly to unwind.
II. Construction and Real Estate in Argentina
Construction and real estate sectors are at a juncture. While building costs in Argentina are cheap compared both with history and relevant peer countries, the macro situation is far from ideal to think in a booming market. Property prices for offices and premium apartments have been constantly falling, threatening the fundamentals of the business. At the same time, rental prices for households are going up, in part due to new regulations which were intended to help tenants, that ended up reducing the supply of apartments for lease. All these trends, coupled with the novelty that Covid-19 brought to the world of workplaces has changed the way we analyze the construction and real estate markets.EconViews-206_Aug-2021