Budget 2020: Changes in the macro-economy will improve activity and follow strict budgetary targets

The following Monday, the government of Mauricio Macri present your last budget project from the current direction: with an expected inflation of 34%, an optimistic GDP rise of 1% and an average dollar of 67 dollarsFinance Ministry officials have finished defining what will be next year in economic matters, the first for an upcoming government.

Without legal changes, even in the debt plan, The project they are going to present will not contain any modifications considering reperfilation. In turn, although details of the bill will be released on that day, Treasury sources have claimed that they maintain their closing budget forecasts with a primary deficit of up to 0.5% and, by 2020, they declare that "this is not yet closed""The agreement with the International Monetary Fund provides for a primary surplus of 1% of GDP.

Monday afternoon, the Minister Hernán Lacunza He will explain to the Congress the details of the plan they plan for 2020. By themselves, they have sharply reduced the forecasts of activity for this year: from a decline of 0.8% estimated two months ago, now they have put it in a contraction of 2.6%.

This year they see that inflation will end in December with an annual change of 53%: The August CPI, which will be released tomorrow, is slightly below 4.3%, with some acceleration in September and a decline towards the end of the year: In recent months, they predict that it could be about 2%.

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For the economy to grow by 1% next year, they expect that exports will boost activity: with an increase of 7%, This will offset the decline in investment, which should be reduced by about 4.9%. Private consumption will be virtually neutral, with a slight increase of 1.4%. And the public esteem with a decline of 3%.

Analysts expect an average decline of 1.4% for next year, according to the study they conducted in FocusEconomics. In fact, only five out of 20 consultants are expecting growth next year, none as optimistic as the government.

"For the July EMAE (monthly activity level estimate), not yet released, we expect it to be positive, reflecting the previous situation," said a source from Treasure. Thus, after this month, they expect that they will begin to feel more strongly the effects on the activity of market volatility, punctually, over the past four months. However, they expect the next year 's brake to be negative by 1%.

In the investment, they see that this year will end with a drop of 23%, for the next they expect that there will be a recovery from the second quarter, 5% per quarter, according to the seasonally adjusted measure.

Dollar and trade balance

The variables that complete the picture of the 2020 budget published yesterday by the budget go through the dollar and the external sector. In the government, they predict that next year, the exchange rate will be $ 67 in annual average, 40% above the average value they estimate at the end of 2019, $ 48, according to Treasury sources.

Indeed, with inflation ending this year at 53% in December (compared to the same month of last year) and a projected CPI for 2020 at 34% by the end of the year, the dollar will have a slight real appreciation, on the sidelines, as regards the present value.

"We see the exchange rate fall in real terms, below the inflation of the period," marked a fountain at the Palacio de Hacienda. In this sense, he added that on several occasions, they stated that he was currently high. In fact, Lacunza himself has stated on several occasions that he has found that the dollar, at current values, is excessively high.

Even in this scenario, the government postulates that exports will lead growth in 2020, with an improvement of 7%, and that imports will increase by 1.3%. Like this Forecasts are expected to end in 2020 with a trade surplus of US $ 17.5 billion, 9.1% higher than expected for the 2019 closing of $ 16.1 billion.

This will help the current account to overcome a deficit of 0.9% of GDP this year, according to the 2020 budget figures, and that the next becomes a surplus of 0.4% of GDP.

Among the international factors that they have taken into account, they consider that Argentina's main trading partners will evolve "reasonably" and that they will not be deceived against it as long as the trade war between the United States and the United States China will stay in the same corridors. to the current ones.