“High-Beta” is one of the most used analogies to describe the Argentine economy. There is a mathematical reason for that. Argentina is not the economy with the worst performance in a medium-term perspective compared to a large sample of developed and emerging countries. But it does hold the gold medal in volatility: that is, the standard deviation of economic growth, which in finance is equal to a high-risk bet.
Selling the Crown’s Jewells
-The situation in terms of the macro fundamentals for the last quarter of 2021 did not change drastically with the result of the primary. We only found out that the ruling coalition is a bad loser. -The CB’s dollar cash is bottoming out, which should motivate a quick agreement with the IMF in the first months of 2022. A drought on the horizon? -The government does not save creativity to regain the favor of its constituents to the general election, which is ephemeral in the short term but costly in the long term.
The Biggest Trade Surplus of the Year, but All That Glitters Is Not Gold
-Exports performed very well with an increase of 63% measured in dollars and 25.7% in volume. Sales from the primary sector and Brazil helped. -Imports fell for the second consecutive month in the monthly comparison. Net of energy, they fell further. The energy deficit is already at USD 672 million and will soon pass USD 1 billion. -Given the low level of reserves, it is highly probable that obstacles to imports will continue or increase, but if the FX spread increases, exports will also slow down.
Unemployment Fell to Under 10%, but Corrected for Activity It Would Be 13%
-Open unemployment is at 9.6%, but that occurs because there are fewer people in the labor market. Unemployment corrected for the activity rate would be 13%. In the GBA unemployment would have risen to 16.7%. Women were the big losers from the pandemic. -Public employment prevented the drop in employment from being greater, but there are still 154,000 fewer workers than in the second quarter of 2019. -GDP fell 1.4% in the second quarter of the year against the first, a loss that was slightly smaller than the 1.6% that was implicit in the monthly indicator of activity. We continue to think that there will be a 7.4% recovery in the year.Econviews-Weekly-September-27th-2021