After the collapse of the economy of 6.1% in the first quarter, some indicators begin to show that the fall It could have hit the bottom in April. But the recovery of activity will be slow: with the V format discarded, now economists adjust the forecasts between the Nike pipe and a U format.
The “V” format was the one that most excited the Government, but reality is revealing something else. “The leading indicators for April are beginning to show a slowdown in the decline in activity, although they do so from very low levels. This is good news, but we understand that it will have to be confirmed as the months go by,” they said from LCG.
Even so, they highlight that “there is no clear engine that can drive future V-shaped growth. “This type of recovery typically occurs after a supply shock or, in the face of a drop in demand, when investment pulls strongly.”
“We do not see it likely that investment will take off strongly in the short term because we understand that the vision of ‘wait and see’. The approval of the Bases Law may generate some momentum through the RIGI, but without great macroeconomic relevance this year. In any case, it can serve as a spearhead to strengthen the recovery process, but not much more,” says LCG.
“Consumption will continue to weaken. It may hit a floor due to the marginal recovery of real wages, but it will hardly generate growth in the immediate future. “We continue to expect a drop in activity of around 4% for this year.”.
The Economist Ricardo Arriazu He assured days ago that “the floor may have been touched in March”, but “The recovery will be more U-shaped.”
“What we hope is a little more similar to the Nike pipe than the short V“says the economist Iván Carrino. And details that the process would last 19 months, which is the average of the previous recoveries. “We see that in April the annualized growth rate is 7%, but as a whole in 2024 GDP will have fallen 2.5%. The recovery would be accelerated if the Government managed to pass laws that help deregulate and privatize the economy. Without those laws, the recovery will probably be somewhat slower.”
“There is no short V recovery and there never was going to be one,” he says Martin Kalos forcefully. He explains that the economy today moves at two speeds. “There are three sectors that are growing: mining, energy and agriculture, and the rest of the sectors most focused on the domestic market are hitting rock bottom and still show no signs of recovery. There is nothing on the horizon that will lift the internal market. “Consumption is down and has nowhere to recover.”
Fernando Marull, director of FMyA, points out that “the high-frequency data for April are mostly positive, especially in consumption, and added to agriculture, which is beginning to gain even more ground, there would already be a monthly rebound. We hope that the rest of the year will continue to drive agriculture, with a harvest that in this campaign would rebound 60% annually in quantities; and it will also allow a greater flow of imports.”
For Marull, “private salaries and pensions (which with the new formula accumulate an increase of 60% between March and April) would recover more than inflation, and this is key since private consumption represents 75% of GDP. On the other hand, investment, which represents 20% of GDP, is not going to collaborate in the short term and public spending, which is almost 15% of GDP, is going to have been adjusted. Thus, we estimate that GDP in 2024 will fall on average 4%.”
However, Kalos points out that “some slight recovery in real wages is not enough because The increase in unemployment and the risk of unemployment will mean that families continue to adjust consumption. In the general economy there will be a very slight recovery towards the end of the year, strongly driven by agriculture, mining and energy, but not by the domestic market. Industry, construction and commerce will continue to be hit hard all this year.”
From Estudio Ferreres they add that the industry is one of the most affected sectors and, moving forward, “We still do not see clear signs that a recovery in activity can begin. “We understand that this will not happen before the adjustment phase focused on moderating inflation gives rise to a new phase aimed at rebuilding family income.”
According to Fausto Spotorno, “the activity data for April are less bad than those for March, but only in July or August will a recovery be seen.” More than a U-shaped rebound, Spotorno sees the outline of a smile. “We would come out of this whole process in May of next year. We are following the historical average of Argentine recessions, which are 20 months,” he declared in La Nación +.