Thursday , May 13 2021

The second recession in the Makri era: in September the collapse was 5.8%

Buenos Aires Economic activity recorded a decline of 5.8% in September, accompanied by dramatic falls in the trade and manufacturing industries, thus formalizing the second cycle of recession during the management of Mauricio Macri.

The National Institute of Statistics and Censuses (INDEC) reported yesterday that in September the monthly Emae rating fell by 5.8% compared to the same month in 2017. Data shows the serious consumption and production scenario,

This is the second biggest contraction in the year: the worst figure was in June when activity declined by 6.8%. On this occasion, the red is explained by the deep decline observed by the agricultural sector after a historic drought.

But this time was not the climate or the natural environment but the direct consequences of a paralyzed economy where the biggest stake in the productive sectors is to try to survive in the face of the ultimate interest rates they face to finance themselves and the bleeding of the economy. purchasing power that paralyzes consumption.

This is evidenced by the official data for September confirming that the most affected sectors are wholesale, retail and repair (-12.8%), manufacturing (-10.8%), net taxes on subsidies -10.1 %), transport and communications (-4.6%) and hotels and restaurants (-4.2%).

On the contrary, the conglomerate of agriculture, livestock, hunting and forestry increased by 2.2% and the good performance it was shared among others by fishing (2.8%) and financial intermediation (2.7%).

"Scaling off the negative impact of drought, the economic contraction has two factors: the increase in the exchange rate and the acceleration of inflation. The subsequent decline in purchasing power in dollars and pesos reduces the demand for goods and consumption of durable use, which has made companies reduce to a minimum production, given the increasing financial support costs stocks higher in conditions of reduced sales, "concluded the consultancy company Ecolatina.

The private diagnosis shows that another element is that "especially in September, the sudden movements in the exchange rate and the expectations for a new IMF deal created uncertainty that paralyzed decision-making by economic agents,

With the red of September, economic activity stays for the sixth consecutive month in decline: in April it fell by 0.5%; in May, 5.2%; in June, 6.8%; in July, 2.7%, and in August – 1.9%. The two consecutive quarters in red are the basis for a technical declare of the recession.

This is the second decline of the economy in the age of Makri. The previous one occurred in 2016. This autumn starts in March and lasts nine months, with catastrophes reaching 4.9%.

For now, economic activity is down 1.5 percent, and private forecasts expect more months in red. Even the official figures show that the recession will continue until the first quarter of next year.

Fausto Spotorno, economist and director of the Center for Economic Research, Orlando Ferreres, predicts that economic activity will fall again in October, although he has made clear that the slowdown may be lower than in September.

"We probably have a low October, but it does not fall so much, too, in November and December, and by March, when the harvest begins to play, economic activity may begin to recover," Spotorno said ironically: "At that point in the 21st- your century is salvation whether it is raining or not ".

The dollar jumped for one day

This is the most spectacular daily climb from September.

The currency recorded a jump of $ 1.07 (2.8%) compared to the end of Thursday and was positioned at $ 36.56 for the purchase and $ 38.50 for the retail sale. The advance is surprising since, according to operators, it is the most significant daily increase since the end of September.

In the wholesale sector, where banks and big companies operate, the dollar gained 1.10 cents this Friday and ended at $ 37.6.

Print edition

The original of this article was published on 11/24/2018 in our print edition.

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