Due to the adjustment plan and the inflationary shock, economists have already begun to notice
signs that what could be the beginning of a new recession
and for the first quarter they expect
a drop in product of up to 6% year-on-year,
the
largest drop since the third quarter of 2020
when the economy fell 10% due to the paralysis of activity due to the pandemic and restrictions.
After being elected president, Javier Milei anticipated in November that
"six very hard months" were going to come.
Activity was already virtually stagnant and affected by
drought
, but then came the
December
devaluation , the
end of price agreements and a new wave of increases
that brought inflation in December to a record 25.5%,
without further measures. to rebuild income.
In this framework, at least 20 indicators have turned red in recent months, showing a
decline in consumption, activity, beef slaughter, imports, gasoline sales, electricity consumption, deeds in the City and loans
to the private sector.
Now, industry and construction data have been added, with
drops of 12.2% and 12.8% year-on-year in December.
"The contraction in consumption is beginning to be seen. Supermarket and wholesale sales in November fall 7.5% and 11.3% monthly. December and January are worse.
The numbers leave no room for doubt
: we are already going through the recession. Although it was something that we had been anticipating, it is still shocking," says a report from Econviews, Miguel Kiguel's consulting firm.
In January, another alert went off with the 6% year-on-year drop in collection, driven by the significant decrease in taxes related to activity and profits, although attenuated by improvements in foreign trade taxes due to the devaluation and the increase of aliquots
.
"The collection anticipates a strong recession,"
estimated Martín Polo, Cohen's head of strategy.
For EcoGo, the latest data anticipate
a first quarter with a drop of 4.8%
compared to the previous quarter in the seasonally adjusted series and
a drop of 6% year-on-year,
very similar to what Econviews expects.
"From the collection data it is clear that the drop in salaries is strong and that translates into a very affected demand," explained Lucio Garay Méndez, from EcoGo.
With parities that fail to match inflation, formal salaries with social security contributions received a new blow in December and fell almost 14% year-on-year in real terms.
"In constant currency, it means
returning to July 2005 salaries
, the largest real year-on-year drop since March 2003 post-convertibility exit," said economist Salvador Vitelli.
In the latest report from the Monetary Fund staff, the Government recognized that poverty is already around 50%, almost 10 points above the second quarter of 2023 and a level that has not been seen for 20 years.
This indicator is not higher because the recession has not yet hit employment, although there are already suspensions in some automotive terminals and layoffs in construction.
For the IMF,
the economy is moving towards "stagflation",
with a CPI that would remain at 25% in January and would only begin to slow down due to the fall in demand, which is why it projects
a fall in GDP of 2.8% in 2024
.
The diagnosis coincides with that of the government, where they believe that the inflationary jump "cannot be transferred to prices" and they expect a proper recession.
Javier Milei proposed to reduce the inherited fiscal deficit of 6 points of GDP with an unprecedented adjustment to lower inflation, but the thawing of prices and the lowering of fixed-term rates caused a
liquefaction of the pesos.
This process will deepen with the rate increase underway and if there is a new devaluation or exchange rate jump, as the market expects.
In this context, the economy could fall 4.1% year-on-year in the first quarter, according to Francisco Ritorto.
"The correction of relative prices deteriorates real income and strongly affects consumption, especially in the first quarter. If we begin to see the fiscal effort intended by the government, the fiscal impulse becomes limited," said the ACM economist.
Two consecutive quarters of decline are considered a recession.
Thus, after a probably negative fourth quarter in 2023 (the data is not yet known), the six months would be completed in March.
"We forecast a drop of 5.3% in the first quarter and a year-on-year decline in all quarters, a strong contraction in consumption and public spending," said Claudio Caprarulo, economist at Analytica.
NE