Just to give you some perspective on that, the world economy is expected to expand 3.9% ...and poor Uncle Sam´s storefront will probably show only 1.8% growth.
This post will probably generate feelings along the lines of crime statistics ...if you´ve been mugged, you think crime is soaring no matter what the statistics say. Income inequality is certainly a concern but if there is a list of countries that still have a middle class, I´d bet that Argentina still ranks high ...as it always has.
Not being much of a consumerist, I´m a poor example of the spending that is driving this boom ...but everything sure smells different than, say, two years ago when cafés and shops were empty, and some were actually closing their doors due to a lack of spending.
Bloomberg reports on the subject today, and mentions that car sales are already up 38% and could exceed predictions by 10,000 vehicles. Tax revenue is way up, too... up about 1 billion pesos more than Bloomberg´s own economists thought it would be.
Where´s it all coming from? Tourism is still down from those halcyon days of the early '00s when Buenos Aires was "discovered." Beef exports certainly aren´t helping. If anybody out there knows the source of this largesse ...please chime in.
Bloomberg doesn´t really explain it, other than foreign investment is up ...and the massive 55 million ton soybean harvest.
It looks like a really good period to be doing business in Argentina.
Inflation remains a problem and the article mentions that consumers here expect inflation to run about 25%... only Venezuelan consumers expect worse. Since expectations can be a driving force behind inflation that doesn´t bode well for keeping the official rate down to the current 10 or 12%.
But still, even with high inflation, I have to think that most countries in world would love to have the economic activity that we´re currently enjoying here.
4 comments:
I really think the only answer to this is Inflation (and expectations of future inflation)
Tax revenue is way up because the main taxes are IVA (that goes up when prices go up) and "ganancias", that goes up when salaries go up (salaries are going up following inflation for big chunks of the population, particularly unionized employees)
And car sales are up because people see cars (and electronics like HDTVs, laptops, etc) as good alternatives to having cash in hand. If you think your cash will be worth 25% less next year, you feel the pressure to spend it right now before the value of the car you want goes up
Every word of that rings true to me, Ricardo.
But where´s everybody getting the money?
I think most of the money comes from the government, ie from pension funds and the central bank reserves. The bigest salary increases are in subsidized industries and areas that receive public spending.
The answer is China.
This decade China turned from being non relevant to the main importer of Argentine products.
In 2010 China superated Japan as the second largest economy (measured by GDP PPP), and is expected to be the first economy in 10 years (although the income per person will remain lower than most other countries).
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