viernes, 28 de septiembre de 2018

Análisis económico de Argentina, de septiembre. Por Focus Economics

Resultado de imagen para argentina President Mauricio Macri’s plea to the IMF on 29 August triggered a sharp selloff in the peso, precipitating the worst chapter thus far of this year’s still-unfolding economic crisis. Macri appealed to the IMF to accelerate the disbursements of its USD 50 billion stand-by arrangement (SBA) agreed to in June, a move that sent investors fleeing as the depths of the government’s fiscal woes grew more apparent. In exchange for bringing forward the disbursements, the government offered new fiscal reforms intended to speed up consolidation. Ahead of the IMF’s announcement on a revised SBA, the pain facing the economy continues to mount. Confidence is in the doldrums and tighter monetary conditions are bound to bruise spending and investment this quarter. Exacerbating matters, economic activity contracted in the second quarter as drought wreaked havoc on the agricultural sector, and a brewing corruption scandal in the construction sector is poised to weigh on activity through the remainder of the year.  Amid the hobbling of activity and the worsening of the crisis, the economy has likely entered recession and a majority of FocusEconomics Consensus Forecast analysts now see the economy contracting this year. That said, a number of analysts are still taking recent events into account. Nevertheless, spending and investment metrics are expected to plummet as oppressive financing conditions and elevated inflation take hold in the aftermath of the peso’s freefall. LatinFocus Consensus Forecast analysts see the economy contracting 1.2% this year, down 1.6 percentage points from last month’s forecast, before returning to feeble growth next year at 0.7% in 2019.  National-level inflation climbed to 31.2% in July (June: 29.5%) on passthrough pressures from the weak peso. A further deterioration in the exchange rate will push consumer prices higher in the months to come, and analysts expect inflation to end 2018 at 40.6% and 2019 at 25.5%.  Reacting to the rapid depreciation of the peso, in a string of meetings in August, the Central Bank swapped the seven-day LEBAC rate with the seven-day LELIQ rate and proceeded to hike it by 2,300 basis points to 60.00%. Analysts see little room for officials to slash rates until the peso stabilizes and see the policy rate ending 2018 at 54.54% and 2019 at 31.83%.  On 6 September, the ARS traded at 37.38 per USD, 36.8% lower than on the same day a month earlier. A further depreciation against the dollar is expected through the remainder of the year as the tail-end of the economic crisis further erodes the peso. Analysts see the ARS at 42.17 per USD and 50.05 per USD in 2018 and 2019, respectively.
POLITICS | Macri’s plea to IMF triggers peso selloff, crisis Following weeks of market turbulence and further capital flight, a devastating selloff hit the peso on 29 August as President Mauricio Macri issued a public plea to the International Monetary Fund (IMF) to accelerate its disbursement of the three-year, USD 50.0 billion stand-by arrangement (SBA) agreed to in June. In the two days following Macri’s announcement, the peso shed 23.0% of its value against the dollar before clawing back some losses following the government’s announcement of new, stricter fiscal reforms intended to accelerate the pace of consolidation. In the midst of the two-day economic meltdown, the Central Bank (BCRA) acted drastically to halt the peso’s freefall by hiking the policy rate by 1,500 basis points to 60.00%. However, this did little to reassure emerging-market (EM) investors already on edge over developing crises in Turkey and South Africa. In the days since, the peso has failed to markedly recover, ending 6 September at 37.38 ARS per USD, down 36.8% from the same day a month earlier and down a breathtaking 100.9% from the beginning of the year. Making matters worse, economic activity in the second quarter was confirmed to have plummeted as the agricultural sector dealt with a severe drought and as earlier financial turmoil hit manufacturing and commerce, suggesting the economy has already entered recession. Meanwhile, third-quarter metrics are expected to take a further bruising from an unfolding corruption scandal in the construction sector. Looking ahead, last month’s abrupt capital flight is expected to exacerbate the already-severe toll this year’s financial distress has taken on the economy. Likely already in recession, the adverse spillover effects from further capital outflows are expected to rock the economy’s still-shaky fundamentals. Tighter financing conditions—the BCRA hiked the policy rate by a stunning total of 2,300 basis points in August—are expected to hit economic sentiment and badly bruise household spending and fixed investment this year and next. Moreover, pass-through pressures from the peso’s collapse are seen driving inflation ever higher, hitting consumers and manufacturers alike as the cost of imports are set to continue to surge. Meanwhile, hoping to preempt new demands from the IMF in exchange for speeding up the bailout, Macri’s plea was followed up by the government’s revamped plans to address its fiscal woes. These plans will almost certainly be painful; new fiscal targets include a primary balance in 2019 (versus June’s agreed-to 1.3% primary deficit), which is expected to be achieved through reduced public spending—in line with the spending cuts originally agreed to in June—as well as new export levies and higher social-security contributions. LatinFocus Consensus Forecast analysts largely agree that, by all measures, this front-loaded fiscal consolidation implies an even more excruciating adjustment and could well protract the recession. Although the vast majority of analysts downgraded their forecasts—across the board, in most cases—this month, many pointed to different reasons for concern. Matías Carugati, an economist at M&F Consultora, argued that the government’s pro-cyclical policy response will only compound the negative impact on economic activity over the coming months. He added, however, that he believes “the government will be able to stabilize the situation in the short-term. Nevertheless, the correction of imbalances will take some time.” Meanwhile, ahead of the IMF’s mid-September announcement on the agreement’s new parameters and whether it will acquiesce Macri’s appeal,
Pedro Rabasa, an economist at DEF, sees considerable benefit to earlier disbursements of the bailout, arguing: “Assuming an agreement can be quickly settled and allows for heavy intervention in the market, the exchange rate is expected to stabilize and fears of default should ease in the short-term. However, doubts over economic policy will linger and fears of a later default will persist as the [expected] recession hurts the electoral chances of the ruling party ahead of the next year’s elections.” Taking into account the BCRA’s latest decision, a majority of analysts see no room to cut rates before the end of the year—in line with officials’ most recent promise not to move rates until at least December. That said, a handful are more skeptical and see the BCRA cutting rates once the peso stabilizes. LCG, for instance, sees the policy rate ending the year at 38.00%. Melisa Sala, an economist at LCG, added: “To the extent that the government can contain the exchange rate and stabilize the peso around current levels, a marked decline in the policy rate is likely to soon follow in order to get the economy back on track.” Ultimately, containing the meltdown will depend on whether investors can trust the government to pursue its fiscal reforms as agreed upon. Moreover, any best-case scenario will lean heavily on a positive outcome in talks with the IMF. That said, an end to the economic crisis may be only one side of the story. Given the recent unraveling of confidence in the Macri administration, as well as a growing corruption scandal affecting the previous administration, some analysts have pointed to a looming political crisis in the run-up to next year’s vote. Putting recent events into perspective and highlighting a narrow path forward for the economy, Gustavo Rangel, an economist at ING, noted: “In light of signs of broader EM contagion […], we expect the IMF to find common ground with Argentina and agree to a sufficiently robust fast-tracking of planned disbursements. Once the new disbursement schedule is agreed, the administration must also update its […] financing plans. Reassuring words of support by the IMF will not be sufficient to extend the market reprieve too much longer. Without a detailed and credible financing plan, confidence is unlikely to be fully restored.” A majority of LatinFocus Consensus Forecast analysts revised their growth forecasts down sharply this month, while a handful were still taking recent events into account. All told, they see the economy in recession this year, contracting 1.2% and down 1.6 percentage points from last month’s forecast. Analysts see the economy exiting recession next year, albeit growing feebly at just 0.7%.
 REAL SECTOR | Economic activity plummets further in June The monthly indicator for economic activity (EMAE, Estimador Mensual de Actividad Económica) contracted 6.7% in annual terms in June, deteriorating from the 5.2% contraction recorded in May (previously reported: -5.8% yearon-year) and marking the worst performance in nine years. June’s contraction came on the back of significant annual declines in agricultural and industrial output, as well as severely restricted trade activity. Construction activity, meanwhile, appeared to stall in June following a string of upbeat readings.
 A month-on-month comparison showed that economic activity contracted a seasonally-adjusted 1.3% in June following May’s 1.2% drop. Finally, average economic activity decreased to 1.8% in June from 2.8% in May.
REAL SECTOR | Contraction of the industrial sector eases in July Industrial production contracted 5.7% over the same month of last year in July, according to data released by the National Statistical Institute (INDEC) on 4 September. The drop was smaller than June’s 8.1% year-on-year decline. July’s reading reflected contractions in almost all components of the index. The tobacco industry recorded a significant decline in output, along with the textile industry and oil refining sector. The drop in production of processed crude oil was owing to plant shutdowns in June. Output of food also contracted, mainly due to a double-digit decline in milling of cereals and oilseeds. On the other hand, the basic metal industries and automotive industry recorded significant expansions in output. Panelists participating in the LatinFocus Consensus Forecast expect that industrial production will contract 1.3% in 2018, which is down 1.4 percentage points from last month’s forecast. For 2019, the panel expects industrial output to rise to 1.1%.
OUTLOOK | Consumer sentiment remains in the doldrums in August The Universidad Torcuato di Tella (UTDT) consumer confidence index was stable in August from July at 36.3 points, and just a notch higher than June’s four-year low. As a result, the index remained significantly below the 50-point threshold that distinguishes pessimism from optimism among consumers, where it has been uninterruptedly for nearly a year. August’s print reflected a modest improvement in consumers’ assessments of both their personal finances and the broader macroeconomic environment, which were offset entirely by a sharp decline in consumers’ willingness to purchase big-ticket household items. Panelists surveyed for the LatinFocus Consensus Forecast see private consumption dropping 1.1% in 2018, which is down 1.8 percentage points from last month’s forecast. For 2019, panelists expect private consumption to increase 0.1%.
MONETARY SECTOR | Inflation continues to climb in July According to the National Statistics Institute (INDEC), national consumer prices rose 3.1% over the previous month in July, coming in below June’s 3.7% month-on-month increase. June’s print reflected a broad-based increase in 11 of the 12 components of the index. The strongest price increases were recorded for: transportation, mainly due to the rise in fuel prices; recreation and culture, due to winter holidays; and household equipment. National inflation increased from 29.5% in June to 31.2% in July, the highest print since March 2017. National inflation as measured by INDEC is expected to be 40.6% at the end of the year 2018, which is up 10.2 percentage points from last month’s forecast. Inflation is expected to reach 25.5% at the end of 2019.
MONETARY SECTOR | Central Bank tightens monetary conditions despite plunging economic activity In a string of meetings in August, the Central Bank of Argentina (Banco Central de la República Argentina, BCRA) responded to acute currency volatility by both deciding to change its key policy instrument from the seven-day repo reference rate (seven-day LEBAC rate) to the seven-day liquidity bills rate (seven-day LELIQ rate) and to, all told, hike the rate to a staggering 60.00%. On the heels of the 8 August seven-day LELIQ rate increase from 37.00% to 40.00%—the same level at which the seven-day repo reference rate was previously held—a second hike to 45.00% came on 13 August as it became clear a stronger response to market turbulence was necessary. On 29 August, amidst another severe selloff brought on by President Mauricio Macri’s plea to the IMF, in which he appealed to officials to accelerate disbursements of the three-year, USD 50.0 billion Stand-By Arrangement (SBA) agreed to in June, the BCRA hiked the rate a third time—to 60.00%. Despite the drastic moves, the Bank was unable to calm emerging-market (EM) investors wary of the government’s fiscal woes. Whereas the later hikes—the Bank’s strongest to-date attempts to restore confidence amid this year’s heavy devaluation of the peso, and intended to moor inflation expectations—were unexpected and decided during emergency meetings, the Bank’s initial move did not represent a substantial shift in policy as the markets for both LEBAC and LELIQ are operated by local banks; the key difference is that LELIQ is not subject to the gross income tax payment. The Bank decided to change the policy rate as the BCRA is gradually reducing the stock of LEBAC and therefore the seven-day LEBAC rate will diminish in importance going forward. Meanwhile, inflation continued to soar in recent months. According to the National Statistics Institute (INDEC), national consumer prices jumped 3.7% and 3.1% month-on-month in June and July, respectively, influenced by strong pass-through effects from the weak currency. In a series of stunning displays, the Bank stuck to its hawkish stance despite news of contracting economic activity in the second quarter. In its third note, the Bank stated it would hold off on further policy changes until at least December. Meanwhile, an expected rebound in agricultural output and the stabilization of financial markets should gradually lead to a recovery in economic activity, although it will take some time to materialize. In the meantime, external risks persist, and the economy will remain vulnerable to the ongoing emergingmarket selloff. Moreover, although the latest freefall of the peso is expected to drive inflation higher, the government’s new fiscal reforms—including efforts to curb public expenditures—should help contain further capital flight. A tight monetary stance is viewed as essential to anchoring inflation expectations and eventually bringing inflation to target. Skeptical of the Central Bank’s commitment to pausing rates until at least December, and illustrating the minority view among LatinFocus Consensus Forecast analysts, Pedro Rabasa, Economist at DEF, noted: “Assuming the currency stabilizes and concerns over default fade, we believe the BCRA may begin reducing rates—cautiously initially—before December, and may accelerate the decline so long as it does not undermine the peso.” The next monetary policy meeting is scheduled for 11 September.
On average, panelists participating in the LatinFocus Consensus Forecast see the 7-day repo repurchase rate ending 2018 at 54.54%. They see the 7-day repo repurchase rate easing further in 2019, closing the year at 31.83%.
EXTERNAL SECTOR | Trade deficit widens in July Exports rebounded in July, expanding 1.7% in year-on-year terms following June’s revised 1.0% contraction (previously reported: -1.4% year-on-year). July’s improvement was driven by an acceleration in energy and industrial exports, while agricultural exports were again hampered by drought. Imports also rebounded, expanding 2.2% annually in July on the heels of June’s 7.5% contraction. July’s decline reflected heavier imports of intermediate goods, as well as consumer goods and energy imports. Meanwhile, capital goods continued to slump in the month. All told, the trade deficit widened from USD 0.4 billion in June to USD 0.8 billion in July (July 2017: USD 0.7 billion). The 12-month rolling trade deficit came in at USD 11.0 billion (July 2017: USD 2.3 billion), roughly in line with June’s result. Panelists participating in the LatinFocus Consensus Forecast expect exports to expand 5.5% in 2018 and imports to increase 0.3%, pushing the trade balance to a USD 5.5 billion deficit. For 2019, the panel expects exports to increase 9.8% and imports to contract 0.3%, with a trade surplus of USD 0.8 billion.
Por Focus Economics - -desde Barcelona España

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