When the legislative elections of November 14 pass, all eyes will return almost exclusively to the economy. Once the results are digested, the question will be how Argentina will resolve the many imbalances that are beginning to grow. They are, mainly, the fiscal issue, the monetary issue, largely the daughter of fiscal problems, and the FX issue, since a spread of 100% will be little more than unsustainable.
Dr. Jekyll and Mr. Hyde, Which One Will Be?
-The primary deficit from January to September was 1.27% of GDP (excluding SDRs), 3.5 points lower than the one in the same period last year -The reduction in the deficit is explained by extraordinary resources by 1% of GDP and by the adjustment in expenses, mainly retirement and social expenses, by 2.5% of GDP -For the last quarter of the year, the government will have neither extraordinary resources nor the political backing to continue adjusting spending, so it will accelerate as well as the deficit
The Recovery in Fast Motion
-The economy advanced 1.1% monthly in August, above the market consensus, and was 12.8% above its level a year ago -Economic activity was for the first time above its level before the start of the pandemic, 0.3% over February 2020 -We have revised upwards our GDP projection for this year and we expect it to grow 9%, although we maintain our expectation of 2.5% for 2022
Econviews Weekly October 25th 2021