In the middle of your European tour, Martin Guzman He justified the package of measures presented by his economic team last week. For the Minister of Economy, a greater state intervention will help meet the inflation target proposal for this year. “The State must play a role in aligning behaviors with what is macroeconomically feasible in an economy that has not yet solved its coordination problems. We are carrying out these actions to correct the deviations that occurred between what was projected and what was carried out; and to be able to meet the macroeconomic objectives of the Budget, “Guzmán told this newspaper.
However, the economists consulted by Clarín agree that the target of 29% inflation annual that Guzmán drew at the end of last year has already distorted and that the strategies that were raised last week of price controls and intervention sector by sector hardly get the desired effect. They demanded a consistent plan from the monetary and fiscal point of view “to disarm the effects of the fierce emission” of last year.
“It is true that there is a lack of coordination between expectations of price makers and what is happening … But we do not know who is wrong. People are not following the inflation guidelines set in the Budget because there is a context that the Government did not foresee in its diagnosis: the falling demand for money“said Quantum economist Daniel Marx, adding:” This occurs in part because of mistrust going forward. but also because interest rates are well below the rise in prices. At the same time, it is true that there is an issue of supply, but the Government has difficulties to understand what are the necessary incentives to increase it. “
At this point, Gabriel Zelpo warned: “In this situation, a greater state intervention only the supply will decrease and further aggravate the problem Of the prices. The proposed anchors are not having an effect: the Government reduced its rate of depreciation of the exchange rate and even so, prices did not change. “
The economist Pablo Goldin remarked: “Argentine history is full of these types of initiatives: with specific, sectoral, micro measures to lower inflation price by price, market by market. They can serve temporarily, within a more integrated macro program, “he said and emphasized:” Inflation is a macroeconomic problem. Price control can be one more chapter within a general scheme with a focus on macro problems “.
For Hernán Hirsch, the official diagnosis fails precisely due to the poor coordination of the macro variables: “Saving distances, the economic situation is similar to what happened in the Macri government. The macro conditions were not given to comply with a goal too demanding. The Government now has to resort to other instruments, such as price control, because both its monetary policy and its fiscal policy they are not consistent with the proposed objectives “.
Amilcar Collante agreed: “It seems that Guzmán is not going to go to the root of the problem, but that they will insist on more controls. That has been proven to have failed. He should announcer some fiscal signal (reduce the fiscal deficit target of 4.5%) and consequently the future monetary issue of the BCRA. In the background, there is no anchor of expectations. there is no macroeconomic plan (fiscal and monetary) medium-term in sight, “he explained.
Despite the doubts generated by the program proposed by the Government, analysts agree with Guzmán that as of next month prices could start to drop, although very far from the expected pace. “If the dollar increases by around 1.3% per month, wages by 2.5% and rates less than 1% per month, inflation should be guaranteed to fall without the need for a price control“said Gabriel Rubinstein, who foresees that by the end of the year the inflation rate is 40% per year.
#Economists #Guzmán #crossing #warn #state #control #insufficient #inflation