The historical crack in the economic discussion in Argentina was if the international context was a ballast or a current that pushes the country towards well-being despite its internal conflictss. It was the discussion, almost to the death, of the relevance of the terms of trade in the growth capacity of undeveloped countries. The dilemma ceases to be a topic of conversation in academic circles due to the vulnerability of the Argentine economy: extremely high inflation, unprecedented levels of structural poverty, without reservations, with distorted relative prices and, as a consequence, an economy stagnant in the last decade. In an estimate made by Robin Brookschief economist of the IInstitute of International Financee, AArgentina was at the bottom of the regional table in terms of total GDP growth in the 2011-2021 decade: -3%; close to Brazil (+3%) and far from the podium of Peru (+39%), Chile and Colombia (+33%).).
ups and downs. Since 2001, the evidence has marked very clear phases: from the depressed prices of commodities to the record prices that began shortly after and lasted until the global financial crisis of 2008. The other cycle, downward, involved a return to lean times and external restrictions, lasted until the start of the pandemic. The paradox was that, in the midst of a generalized hostile scenario, another framework was born that was prolonged over time: the boom in the prices of primary products that benefited not only the country but also the rest of the producers of primary goods.. For Argentina, it meant that even in a campaign with drought, it obtained the second historical record of agricultural exports. But there were also other traces left by the pandemic on the global economy and how it will end up affecting an economy with foundations as flimsy as ours.
“It is an extraordinarily positive cycle”, emphasizes JGeorge Castropresident of the IStrategic Planning Institute. The analyst explains that we are facing a new super cycle of primary goods driven by the explosion in demand from China, whose economy survived the pandemic in 2020 (+2.1% of GDP) and grew by 8% in 2021.
The protagonist. The Asian giant is a true energy and food vacuum cleaner and became the leading net exporter of capital (it had a trade surplus of US$650 billion in 2021), surpassing the United States as the world investor par excellence. The issue not only affects the global agricultural market, with sustained prices, but also mining and energy exporters. Chile, for example, is experiencing a copper boom, which is reaching US$10,000 a ton and an even higher ceiling is projected for 2025. The barrel of oil rose 60% and natural gas grew 45% in the last twelve months. For Castro, this is just the beginning of a new long cycle that could last longer than the previous one and that arises as a result of the brutal growth of productivity..
Argentinian model? for the economist Roberto Vassoloan IAE researcher, the question that is going around the world is whether inflation will be a temporary phenomenon, or whether this reversal will be slower. “I tend to believe that it will cost the world much more than what the markets estimate today to return to pre-pandemic values..
The reason lies in the incentives of those who define monetary policy”, he explains. In the case of the Federal Reserve, for example, Vassolo projects that raising the interest rate and withdrawing the monetary stimulus will have a negative impact on the price of shares (which accounts for almost half of people’s savings stock and pension funds). ) and will end up hitting the employment goals hard. Another uncertainty that prevents projecting the same solutions as before.
The World Bank has already projected lower global growth for this year (+4.1%) due to the impact of Omnicrom, which in the case of the United States implies a GDP increase of 3.7%. Any monetary swerve would drastically affect this forecast, so it is expected that there will not be a sharp drop in the inflation rate either.which bets on being controlled as public finances finish recomposing and the demand for money can digest the monetary tsunami of 2020.
close impact. For the Argentine economy, there are three external variables that decisively affect its vitality this year: a clear international financial horizon, sustained exportable balances and the price of energy.
Bringing to fruition the long negotiation with the International Monetary Fundl It will have three immediate effects: oxygen for the institutional framework, an explicit program with goals to meet, and the relief of not having to make disbursements for the next two years. One of them would be to increase the level of the Central Bank’s current meager reserves in order to have “fire power” in the foreign exchange market. And with markets closed to credit, the only needle that can move is to increase exportable balances, either through an accelerated devaluation or better product prices. Here the novelty is that, despite the bad weather with which the year began, the harvest would “only” be harmed by no more than US$2.9 billion and US$4.8 billion (1% of GDP) in its final impact on the entire chain. Dante RomaroManager of Market Analysis of the firm F&Oestimates that the price peak that occurred in the last week for soybeans (close to US$600 per ton) is discounting the poor production in Brazil, also due to climatic factors. “The advantage for Argentina this year is that production here would fall by a maximum of 10%, and prices rose by almost 30%”clarifies.
He says that the speculative funds acted propping up this rise and could continue buying until the climate impact in South America is defined. “Once China has assembled its supply, the eyes turn to the new US crop and with the margins that there are, we should go to a strong increase in production,” she concludes.
underground. Finally, the other part of the equation is the price of energy, which has a double impact on the Argentine economy. In the short term, import pressure will increase with rising gas prices (almost US$5 billion in 2021) and the Government’s reluctance to rationalize its consumption through tariffs.. In the last three years, they have increased by 9% and experts calculate that with a rise of 130% they would only have an effect. The same happens with electricity, whose matrix continues to depend on fuel oil and gas for generation.
But it will also promote the dormant dream of Vaca Muerta, the oil and, above all, gas basin with the most projection in the country. The only bottlenecks that the sector could face for a productive boom is the scarcity of funds to accelerate investments and the internal and sustainable truthfulness of internal prices.
The commitment with the IMF to cut the drainage of funds to cover the gap between the growing costs and the frozen rates with inflation running at 50% per year, had a compromise exit on the map of those punished with the removal of subsidies in the area metropolitan. Due to its limited impact (it is estimated that there will be 500,000 meters in this situation) it is not expected to correct the imbalance that the sector has been dragging since inflation reappeared with all its fury and tariffs became sensitive to political humor. A puzzle to put together where, this time, not everything depends on the cabotage strategy. The others also play.
