The complicated international scenario sounded like the perfect excuse for many of the ills that the Argentine economy had been accumulating for three years. To the pandemic, which it shared with the rest of the world, the negative impact and the subsequent recovery revealed a particular sensitivity of the local numbers: GDP was among those that fell the most (10%), but it was also one of those that recovered almost all of the above in 2021. However, one figure is enough to understand the qualitative difference that separates the world economic crisis from the one Argentina is going through: while in the United States there is concern about the highest annual inflation rate in 40 years that was 9% in the last measurement, estimates indicate that for September and October we will be a little below that number: 7%… but monthly.
fears. According to a survey by the prestigious international consultancy Mc Kinsey, the main concerns of international companies consulted around the world are: the effects of geopolitical conflicts, the interruption of the supply chain and inflation. But the weighting of these elements changed in the last year: what, in the shadow of the war in Ukraine, was at the top and closely followed the logistical disaster caused by the interruption of the freight line to and from the East, gave way to the new world ogre: inflation.
The paralysis of the world economy during the pandemic was helped by a jump in the monetary issue in “hard” currencies (euro, dollar) and that the gradual recovery coincided with the emergence of the conflict in Ukraine with the consequent energy shock. In the European Union, for example, the rise in costs of the last six months, the energy impact on companies was the most serious in 41% of cases, while, in the United States, it was the rise in wages in a market with almost no unemployment, which affected 37%.
The growth of the global economy went from 3.8% per year for the period 1950-2014 to 2.2% projected for the period 2014-2064.
At home. For Sybil Rhodes, Director of the Department of Political and Legal Sciences of the UCEMA, crises always bring some opportunities, even in war that could open opportunities for Argentine exports. “But there are also negative aspects that are very visible: the United States wants to lower its own inflation rate, but the decisions of the Federal Reserve (FED) affect the rest of the world and in some recent historical cases, the consequences were serious”, he maintains. In his opinion, wars always bring more uncertainty and no one escapes the consequences of a general drop in general demand.
Precisely, the announcement of the FED supported a rate that will end the year with its fourth rise of 0.75% (3% in total but that will end up tripling the interest with respect to last year). Jorge Castropresident of Strategic Planning Institute, observes that this is clearly as a priority objective the attack on inflation, even leading the economy into a temporary recession. “The entire world crisis situation is generated by a geopolitical event and unrelated to the process of capital accumulation, which is the war in Ukraine, and until it is resolved, uncertainty will continue. To end it, a negotiated peace process is necessary and now the opposite is happening: Russia sees that NATO is in front of it, not just Ukraine. All this generated a food and energy crisis, as a result of the record price of energy, which in the last year increased 700% in the European Union“, Explain.
Chance. For Argentina and Brazil, he interprets that an invitation to increase the production of agri-food and for our country, unleash the production of gas from Vaca Muerta. “What is happening in Brazil, which is the eighth largest economy in the world and the main industrial power in Latin America, has a strong impact on Argentina”, he points out. This year it will grow 3%, there is already deflation, it has a commercial surplus and international reserves reach US$ 350,000 million. But the doubt is in the final effect of the superdollar and the explosion of demand on the price of commodities, key for both nations.
International economist and analyst Marcelo Elizondo sees an inevitable projection towards a global economic slowdown, with the rise in interest rates, liquidity absorption policies to slow down inflation, the impact of inflation on consumption and investment in the midst of a geopolitical crisis. “The world grows less due to the multiple challenge of the ‘super dollar’ and the financial decisions of the fly to quality (fly towards lower quality assets) and, therefore, less dynamism”, he adds. “Not yes if there will be a recession, but yes a deep slowdown. This affects global trade: until last year it grew 6% annually in units and 20% in dollars. I estimate that it will grow less (2% is projected for 2023 instead of the 4% thought)”, he adds. This scenario will not be homogeneous: in his opinion, an enormous reconfiguration of the structure of the global economy is taking place with a high prevalence of technological sectors: with those that incorporate technology and intellectual capital, on those that depend on international prices that are technological.
How will it impact the Argentine economic situation in the short term? In Argentina, he underlines, out of the 500 largest, 300 are foreign, which delay investment conditions, in addition to internal climatic, fiscal and monetary problems. But Argentina is more sensitive to international crises: in 2020 foreign trade fell 15% instead of the global 5% because it is more dependent on temporary sectors. “The interest rate affects a lot because it puts a ceiling on international prices, which would have fallen more if there had been no war in Ukraine. The seriousness of the events in the “cold” war between Russia and the West is marked and that clearly affects the scenario with more uncertainty, a drop in investment risks and postponements, affectation of the value chain and the interest rate”, he clarifies. This, to compensate for the increase in emissions due to the pandemic and also what had been accumulating long before. There is a cause that was the overflow emission and a trigger that was the rise in primary products.
perspectives. Specifically: “if the trade in grains and energy in Europe begins to be rearranged, the crisis can be cushioned for Argentina. After all, 70% of exports are of agricultural origin”, he adds. TAll this peculiar international context could cover up the Argentine economic problems themselves and everything will be more complex if the problems of competitiveness are not attacked, because the IMF could not generate a domino effect and then it is more careful with Argentina”.
In this vision for the imminent 2023, the scenario will be more complicated if there is a drought, prices do not remain so high and the interest rate continues to increase. A combination in which not only climatic chance has its responsibility. Also the good or bad praxis and the political effects of others. Welcome to the world 21st century version.