Far from an optimistic climate

The Argentine economy will end 2020 with a contraction of more than 11 percent, largely as a result of the pandemic and the measures adopted to slow down the rate of contagion, according to the estimates of various consultancies and the International Monetary Fund (IMF itself). ). Therefore, the recovery projected by both the national government and the IMF itself for 2021, which will be in the order of 5 percent, will improve the social mood and the business climate but will not be enough to expand the economy. In other words, only part of the ground lost in the current year will be recovered.
The Observatory of Public Policies of the National University of Avellaneda considered that policies as the high-scope program of the ATP (more than 250,000 companies accessed in the first round, in April), loans at a rate of 24% for many SMEs, the IFE payment for the self-employed and the self-employed, the prohibition of dismissals without cause and the double compensation, helped ensure that the impact of the pandemic has not been catastrophic throughout the productive network.
Now, what are the prospects for next year among economic agents? 61% of the companies consulted expect the country’s situation to be worse next year, but with regard to its economic situation only 31% maintain the pessimistic outlook, according to a survey recently released by the Argentine Industrial Union (UIA) . According to the factory headquarters, this indicates a slight improvement in expectations, which is reflected in the fact that while in June 13% of companies expected to enter bankruptcy, in October the figure dropped to 5%.
54% of the companies consulted increased their demand for credit, but only 40% claimed to have accessed the required amount, amid the pandemic. The gap in access to credit was greater in companies with falling sales, said the entity. 56% of these companies increased the demand for loans, but only 34% were able to access the amount, according to the study carried out between October 27 and November 6.
Regarding the BCRA regulations to postpone the payment of debts in dollars, 22% of companies said they were affected, while 40% declared they had difficulties in accessing export credit. Meanwhile, 49% of companies claim to have logistical difficulties with interjurisdictional transportation, while 35% said they had problems with the transfer of personnel in CABA and the suburbs.
Regarding foreign trade, 82% say they have difficulties in the delivery of raw materials and supplies, and 64% declare they have difficulties accessing the BCRA exchange markets. On the other hand, 85% of the companies consulted had at least 10% of their staff licensed and suspended (20% made suspensions. To deal with this situation, 33% increased their staff in some cases with temporary contracts .
Beyond the mixed expectations for next year, some recent data is positive, although it is not enough to improve the general crisis situation. Among them, the use of installed capacity in the manufacturing industry reached 60.8% last September, the highest level of the year, and is already above pre-pandemic levels as reported by INDEC.
The average production capacity of the manufacturing industry was 3.1 percentage points higher in September than that registered in the same period of the previous year, when it reached 57.7%. It also exceeds by 2.4 percentage points the 58.4% of last August and reached its fifth month of continued growth since the beginning of the crisis caused by the pandemic.
This tepid recovery that is registered in the national industry is also observed in the sector of the province of Santa Fe. Indeed, the Industrial Federation of Santa Fe indicated in its current report that in September the factories of the Province showed a level of production 3.1% higher than the same month last year. In any case, the Santa Fe factory production accumulated at the end of the third quarter of 2020 a decrease of 10.3% compared to the same period last year. Most of the industrial activities in Santa Fe show significant production drops in relation to January-September of the previous year, especially favored as of March in the framework of the Covid-19 pandemic. At this point, not a few companies are content to survive this deep crisis and postpone investment plans because, directly, they do not have resources or access to credit at rational rates. It is clear that beyond a rebound in the economy, 2021 will not be easy either.

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