The three axes to understand the economy that comes after going to the polls

In the absence of genuine and solid financing in what does the local market (product of all the complexities through which they are currently going through), tools begin to be reduced, and that the tool par excellence, on which you can count on the Government to carry out this type of policies is that of continuing with financing from the Central Bank to the Treasury to sustain the actions to stimulate demand.

In this sense, the fundamental thing is to be able to focus on inflation, regardless of what the economic recovery is. And if we think about possible results of this economic course, the depth of financing from the Central Bank to the Treasury in accordance with the possible price agreements that have been tried to be carried out by different mechanisms, will be what determines a stabilization of inflationary inertia or a potential regrowth with a depth subject to the disruptions that may occur with these aspects.

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The second axis, and a fundamental approach to the electoral result, is the unequivocal balanced Congress that arises from there, which, in terms of decision-making for the realization of investments, a balance of power and a Strengthening of institutions in legislative matters could become a factor that favors decision-making on investment matters.

And the third axis, fundamental, is the announcement of a acceleration of negotiations with the International Monetary Fund (IMF). In this sense, what it is going to have as its central point in terms of impacts on the economy or on the different variables are two aspects.

  • Reducing the gap with financial exchange rates, which is going to bring about as action by the government, a feasible acceleration of the devaluation without observing a devaluation shock, which does not seem to be the most probable.
  • The reduction of the deficit, which is the most critical point, which is surely going to demand the IMF. And it is the most critical point, precisely, because it is the one that is opposed to the political profile of the government, and it is the one that can undermine the objectives of its electoral base.

In conclusion, the results in macroeconomic matters will depend on the coordination of all these aspects mentioned, with which, the preliminary conditions of the agreement with the IMF, that will be exhibited according to the president’s statements Alberto Fernandez, at the beginning of next month, they will provide a clarifying panorama regarding the probability of success that this program will have. And then, fundamentally, The final agreement, which will hardly be before the end of the first quarter of 2022, will be the variable on which the rest of the agreements, both political and economic, must be aligned., which are going to have an impact in the medium term on all factors in terms of the fundamental variables of the macroeconomy.

Corporate Finance Manager of Pgk Consultores, member of TGS Global.

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