More than an epic measure before adversity, the tools to dose the drainage of dollars constitute one more turn of the thread to the exchange trap that has been in force in the country since September 2019 and that worsened as the pandemic forced to issue more to get out. in aid of economic paralysis.
A little history. On the last business day of October 2020, the “blue” exchange rate reached $194, with a gap of almost 95% compared to the official one. An increase of 23% in the 20 months that have passed, but which actually conceals an almost vertical fall in the US currency: during that period, inflation was 125%, five times more. It was a success of the economic policy, only for the short term: the handling of the foreign exchange market was done on the basis of restricting monetary expansion by issuing debt in pesos and arbitrating dollarized Treasury bonds. Conclusion: a year and a half later, the backlash of that plus issue generated inflation that is already comfortably above 5% per month (80%) that undermined the super-dollar at the end of 2020.
The invasion that wasn’t. As a prelude to the new measures to tighten the control of foreign trade, the idea was installed that there was an unstoppable advance of imports that emptied the reserves of the Central Bank. However, the accounts do not show that result. In the first five months of the year, exports reached a historical record level (at least at nominal values) of US$35,917 million, 27% more than last year against US$32,722 million of imports, but which rose 44% year-on-year. The photo indicates a modest surplus of US$3,196 million, but it is clear that while foreign sales go up the stairs, purchases go up the elevator.
There are some clues to understand the behavior of both directions of international trade, but above all to predict the immediate trend, an issue that greatly worries the Government due to the increasingly low level. The consulting firm EcoGo estimated them for the third week of June at US$38,000 million (US$3,000 for free availability). “This dynamic moves away from meeting the reserve goal for the second quarter, which will probably have changes after the approval of the new debt tranche by the FM,” it highlights in its latest weekly report. For the analysts of the consulting firm Invecq, the lack of consistency in the speed of growth of imports in relation to the level of economic activity that they attribute to the anticipation of requests for foreign currency needs is striking, anticipating that, finally, a closure or a slowdown in imports. The self-fulfilling prophecy.
Bone scan. The other variable is the composition of exports and imports. The shipment record has to do with the good prices in the international commodity market (especially grains and oils). 66% is originated, precisely in the agricultural sector, which even had a discreet performance in production but that overcompensated with the values in the global market. Prices impacted, in the case of exports, 23% and quantities only responded 3%, to reach the record figure.
Among imports, the item that exceeded all forecasts is, precisely, that of fuels: 205% more than in 2021 (80% impact on prices, due to the oil shock that accelerated with the war and 70% due to more quantities purchased) but, however, it was not enough to alleviate the chronic shortage of diesel. The rest of imports are intermediate goods, inputs for industry and only 25% increased consumer goods, well below the average. Even cars and vehicles fell by 10% compared to 2021. The good news is that imports enter the production circuit directly: only 11% are consumer goods. The bad news is that, due to its characteristics, any attempt to restrict it directly or indirectly (by lengthening payment terms, for example) directly affects the productive circuit. “The economy can close even more. Of course, with a cost in inflation and activity, but it can be done”, he anticipates Francis Gismondi, director of Empiria Consultants.
The rigorous question is whether the Argentine economy is indeed open and the closure of imports is a temporary matter that would only affect the productive matrix in the short term or if it is already closed and is further encapsulated. For Marcelo Elizondodirector of DNI Consultants“the economy is very closed and generates a vicious circle: as it has many distortions (an over-expanded public sector that affects systemic competitiveness, inflation, public spending and growing tax pressure and regulations for others, the problems can only be corrected with more economic closure“, Explain. For that, he adds, to carry out a more functional opening it is necessary to “order the macro and politics does not want to do it for not facing a political cost”, he concludes. Instead, with each additional control, the exchange rate moves away from an equilibrium value. “If the macro were ordered and the exchange rate were unique and free, it would be even lower than the current financial rates that have a negative expectations component incorporated,” he argues.
Closed doors. Predictions suggest that, if reserves do not accumulate in the months in which the harvest dollars come in, and they are not accumulating, for the seasonally low, it only remains to wait for more imports to be closed. “That implies a larger exchange rate gap, higher inflation and lower growth of the economy, because a good part of the imports are used to produce in the country”analyzes Gismondi.
For Fernando Marengodirector of Arriazu Macroanalyststhe measures are clearly a patchwork, “because the underlying problem is the fiscal deficit that must be financed plus debt maturities in an economy that lacks confidence.”
“What is demand for pesos is to go to the exchange market and the Central Bank loses reserves. Since it cannot afford to lose reserves, perfect the stocks: I will not let you matter and on that day yes, the Central Bank can compare reserves as never But the cost is clearly recessive. We are in an economy with a short blanket, what serves to cover something discovers another hole, which will hold as long as there are reserves“, he concludes.
In the index prepared by the world Bankwhich links the total trade flow to the GDP of each country, Argentina is in the lowest range of economic openness. The local index is 30% while the world average is 52%, similar to the OECD countries and somewhat more than the countries of Latin America and the Caribbean (47%). The European Union (86%) and some countries with recent growth in their trade are far behind: Ireland (240%) or Mexico (78%). On the other hand, the “continent” countries, due to their extension and number of populations as well as variety of production, have a more self-sufficient internal market and are in the lower part of the index: the United States (the largest in the world) shows 23% , China, 35% and Japan, 31%. Even Venezuela passed us in this indicator and we could have the consolation of the continuous effort to match the most closed country on the continent, Cuba (16%).
In another time, a good harvest was expected to save the economy. Now it is added to bet that the dollars flow normally so as not to have to apply diesel rationing, the recessive brake or subject the activity to inflationary stress that is constantly running the arch.
