Experts raise forecasts as inflation soars
Analysts predict annual rate will come in over 45%, casting a shadow over President Macri’s re-election hopes.
However, new polling data suggests the PRO leader would still beat Cristina Fernández de Kirchner in a hypothetical runoff next year – and that Buenos Aires Province Governor María Eugenia Vidal would defeat the former president by an even wider margin, giving the ruling Cambiemos (Let’s Change) coalition temporary breathing room.
PRICE RISES
INDEC i ndicated t hat September’s figure was the highest monthly increase since April 2016, when prices rose 6.7 percent. The current rise was led by transport, which surged 10.4 percent, followed by 9.8 percent for shoes and clothing, and food which gained seven percent.
Speaking yesterday, Economy Minister Nicolás Dujovne warned that October’s figures could be as bad – or even worse.
“We’ve had a strong devaluation in August which has passed through to price, generating this inflationary peak,” explained Dujovne at the IDEA colloquium for businessmen in Mar del Plata on Friday. “Consumption has bottomed out in October,” he added, to the scepticism of the crowd.
Despite Dujovne’s optimism, analysts indicate the end of the year and 2019 will be tough from a macroecono- mic standpoint.
Inflation for this year is expected to close the year at 47 to 48 percent, according to Ecolatina economic consultancy firm, while the Central Bank’s REM market expectation survey puts it at a slightly lower 44 percent. Most expect the figure to come in near the 45-percent mark.
According to the International Monetary Fund, Argentina will end the year amongst the five nations with the highest inflation rates in the world, just behind Venezuela, South Sudan, Sudan, and Iran. Last year, Argentina came in eighth with a 24.8 percent surge in prices, behind Venezuela, South Sudan, Congo, Yemen, Libya, Egypt and Sudan. It is creeping closer to a title no-one wants to win.
Government officials claim the worse should be behind us in inflationary terms. Dujovne noted that the Central Bank’s restrictive monetary policy under Guido Sandleris is beginning to have a positive impact, which in turn comes coupled with an end to wage depreciation and a tepid recovery going forward.
Leandro Cuccioli, head of the AFIP tax agency echoed his optimism. Also speaking at IDEA, he said he was “confident that early next year we are going to see a recovery in terms of output,” adding that he expects a good showing from the agricultural sector.
“Inflation is set to fall over the next few months, but not for a good reason but because the recession will deepen,” explained economist Agustín D’Atellis in a radio interview this week, a view that goes in line for economic expectations for 2019.
According to the Economic Commission for Latin America and the Caribbean (CEPAL), the local economy will contract 2.8 percent this year and a further 1.9 percent in 2019. Argentina, along with Nicaragua and Venezuela, are the only three Latin American countries expected to see negative GDP figures next year. The region is expected to grow 1.3 percent in 2018. RE-ELECTION HOPES
The ongoing economic turbulence will likely be one of the main issues in next year’s presidential elections. President Macri has already announced he will be seeking re-election.
According to the latest set of figures re leas edbypoli ti calco ns ultancyfirmSynop sis, economic issues nowrep re sent 58.9 percent of people’s perceptions of the country’s major issues, up more than 10 percentage points since the beginning of the year. Last October, when Cambiemos delivered a decisive victory over Cristina Kirchner in midterm elections, 41 percent of those polled believed the economic situation to be worse off than a year before, compared to 73.1 percentt oda y.Lookingforward, 51 percent believe the economy willbeworseof fa ye arfrom now, compared with 28.5 percent who think it will improve and 15.2 percent who expect it to remain the same.
Macri and his main electoral strategists, Cabinet Chief Marcos Peña and Ecuadorean advisor Jaime Durán Barba, remain confident, though. The continued presence of Cristina Fer- nández de Kirchner means they can rely on what has been a winning strategy over the past several elections: polarisation. It also means the Peronist field will remain fragmented.
According to Synopsis, Macri would overcome his arch-rival in a hypothetical run-off, taking 46.6 percent of the vote, compared to the Buenos Aires province senator’s tally of 44.1 percent. With 9.3 percent of the electorate still undecided, the former president could still challenge Macri, which could trigger what many see as Plan B.
For months, speculation about the re-election has centered around whether Macri would run or if he would step aside for one of his protégés, among them Vidal, the Argentine politician who has the highest approval ratings in the country.
Synopsis’ figures predict that Vidal would beat Fernández de Kirchner in a 2019 run-off with 51.6 percent to her 44.6 percent. The detail: the number of undecided voters drops to just 3.8 percent.
Synopsis’ figures predict that Vidal would beat Fernández de Kirchner in a 2019 run-off with 51.6 percent to her 44.6 percent. The detail: the number of undecided voters drops to just 3.8 percent.
While the election is still 12 months away, the PASO primaries are currently scheduled for August, meaning the electoral cycle could begin – well before the Argentine economy begins to show signs of recovery.