Two months before the PASO elections, the economy dragged a loss of real wages of 4.7%, combined with a rise in inflation that is around 42% between January and May and a growth in activity of 1.5%, although with a tendency to decelerate.
The economist Nadin Argañaraz surveyed the conditions in which the economy arrives at these elections compared to the scenario that was registered in the last four presidential elections.
The economic variables evaluated by Argañaraz are: prices, level of activity and real wages. It also incorporated growth and inflation expectations at the time of each vote.
"It is based on the fact that the voter thinks about his vote based on how the year started. And that happens until the month of the election. But it is also assumed that at the time of voting affects what is expected for next year in terms of rising prices and change in level of activity. An economy that is bad is not the same but everything indicates that it will be better, than an economy that is bad and that everything indicates that it will continue that trend, "says the economist.
In Argentina, inflation rose in each of the election years. "It started with 21.5% per year in 2007 and today it is with 108.8% per year (April), approximately."
"The inflation expectation for the following year also rose in each of the years. There was also a relevant increase: from 20.6% per year in 2007 to 107.5% of expectation by 2024, "details the report.
2007 was the year in which economic conditions were the most favorable: inflation was 21%, the expectation of growth that year was 8%, and real wages increased 1.6%.
The role of expectations
Economic activity marked the 2019 elections, in which the ruling party lost, and will mark the one to come. In the year in which Mauricio Macri left the presidency, the economy contracted 2.9% and by 2023 the Central Bank's Market Expectations Survey (REM) estimates a retraction of 3.1%.
The central difference between those elections and these is that expectations for the following year were negative: in 2019 votes were cast with estimates that the economy in 2020 would shrink 1.5%. The pandemic burned those papers and the gross product sank 10%.
On the other hand, expectations for next year are not so bad: the REM estimates only a decrease of 0.2%.
In line with economic activity, real wages fell in 2019 and are falling in 2023.
In 2007, 2011 and 2015 real wages grew in line with the level of activity. The best context was provided by 2011 with an increase in real wages of 8.2%. For now, the worst year was 2019 with a fall in real wages of 7.1%. With data from the first quarter of this year, there is a fall of 4.2%.
2007 was the year that combined the greatest variation in gross product with the lowest inflationary expectations. 2011 was practically the same as 2007. In 2015 there was a lower positive variation in GDP together with higher inflationary expectations, although very far from what happened in 2019 and what is happening today.
"As most of the drop in activity this year is focused on the great drought, it opens a very different scenario for 2024. So far, the economy is expected to recover next year. Without drought and with an increase in the production of energy and other natural resources, the economy will have an incremental flow of dollars that would exceed US $ 20,000 million and that is highly likely, "he says.
For Argentines, the presidential election of this year 2023 is going to take place in the worst inflationary context of the last five elections. Indeed, compared to the 2007 election, inflation has increased fivefold," he points out.
The relevant aspect to delineate what is expected with the real wage both in the remainder of 2023 and in 2024, is the level that the inflation rate will have. "For the voter, the credibility of the proposals that exist to lower the inflation rate is key," summarizes Argañaraz.