Miley used a curious phrase to predict a sharp increase in activity: What economists say

chairman xavier miley He didn’t shy away from using jokes and popular expressions during his presentation at the Fundación Libertad event last night. Convinced before the audience in favor of his declared “ideas of independence”, the President did not refrain from assuring that “the Central Bank is a matter of time, I will get it,” he said, referring to the Governor of Buenos Aires. axel kisilof as “the Soviet in the province” and even mockingly imitated The Economist carlos melkonian,

During the speech, Miley made an optimistic comment about the economic recovery, stating that “the country’s risk-of-decline projections suggest that the economy will improve in the future.” The statement not only suggests an improvement in market sentiment for Argentina, but also anticipates strong economic growth in the short to medium term.

But one of the expressions that attracted the most attention was another in which he outlined what he thought would be the driving force of economic activity as a result of his fiscal adjustment policies. For Miley, reducing the public deficit would mean a massive return of savings to the private sector which would be translated into investment. And from there, he explained, there will be very rapid economic growth. However he resorted to a curious popular idiom to illustrate this.

“Note that when we got a huge deficit of 15 points of GDP today between the adjustment made at the Treasury and the 15 points adjustment made by the Central Bank – 5 at the Treasury and 10 at the Central Bank, we will reduce it to 13 Not only this, When the year ends we will return 15 points of GDP as savings to the private sector″, the President explained.

“Do you want to know how the economy is going to grow? It’s going to rise like a diver’s fart,” he concluded.

The statement did not receive unanimous welcome. Indeed, comments abounded that the President’s expectations were overly optimistic.

economist louis seccoFor example, the medium commented that drivers for such a rebound in activity are not observed.

“It seems to me that in a typically consumption-dependent economy like Argentina – two-thirds of total demand is private consumption and the rest is distributed across exports, public consumption and investment – ​​it is very difficult to extract a small V without a pickup in that.” Till. I see more of a wide U,” he said.

,What can boost consumption? purchasing power of income, Reducing inflation is, obviously, very important but it does not necessarily guarantee that purchasing power will improve. When can we see improvement in income? At present we are not able to see it. Joint ventures help, but there is a delay for most Argentines. In public employment, retirees, pensioners, the loss is very strong, but perhaps at the margin it can compensate for some of what was lost. On the other hand, the rate increase has not yet fully materialized and this creates expectations of a new decline in purchasing power. The government is now very keen to show a reduction in inflation and there are things like prepaid payments which impact disposable income, so you don’t have that engine,” he commented.

“And then you have stocks, which are hindering activity. Because it is more difficult to invest, it is more difficult to consume, because you do not allow yourself to be ruined when the flight risk remains, which the government accepts and that is why it does not lift stocks. I expect reactivation, but not to be noticeable in urban areas that are highly dependent on employment and manufacturing, it will be concentrated in oil, mining, agriculture and fishing,” he concluded.

Also one of the economists who was the target of Miley’s ridicule, carlos melkonianDisagree with the idea of ​​a strong rebound.

“I wish it and I hope for it (N. de la R.: rapid return to activity). But I think everything is going to be much more difficult.He commented that the path to economic recovery will be slower and more complex than expected.

Melkonian criticized the lack of effective measures to promote the classic determinants of economic growth such as consumption, investment and exports. According to him, these sectors are inadequate to ensure a solid and sustainable recovery. “When you want to see where consumption is going to start, where investment is going to start on a large scale, where exports are going to start being competitive and large-scale. “It’s all very slow,” he explained.