Turning point for industry | The sector fa …

Industry growth in November, highest since February 2018, was a turning point. From now on, the manufacturing sector will start to recover at a very accelerated pace. The data expected by automakers for December is one example, with growth of 107% year-on-year. The terminals produced 30,172 vehicles, more than double the 14,524 in the same month of 2019.

In November, the industry already employed 1,500 more workers than in February, before the pandemic.

The consolidation of the economic rebound after the largest decline in history – in April, for example, automakers set the zero production record – is forcing a new agenda on the government: managing growth.

The biggest challenge in this process is how to avoid the usual: missing dollars.. Not only structurally, this is what Argentina has to resolve in the medium and long term, but also in times like this, when exports are in low season.

“There are industries that were not viable a year ago and that work three shifts. There is a very marked recovery path. Of course, everything depends on the pandemic, but with the vaccination and the protocols, this year the industry has everything to grow very strong, ”says a factory manager.

In the economic cabinet, they manage private sector projections which speak of an increase in automobile production of no less than 50 percent from 2020 and of 80 percent in the category of agricultural machinery.

All of this growth will generate a greater demand for foreign exchange to pay for the imports that factories need, such as inputs and machinery..

This is the context that explains the currency regulation measures that the Central Bank took this week. It was a transcendent decision, oriented towards two objectives: stimulate import substitution and reserve dollars for local production.

More specifically, the monetary authority has established that importers of luxury goods will only be able to access the foreign exchange market one year after purchase. When you want to bring a luxury car from abroad, with a value of 35 thousand dollars (FOB) or more, the importer should ask their seller to finance the transaction or pay for it with deposited foreign currency out of the country, but the Central Bank will not. will deliver the banknotes from your reserves until twelve months have passed. Ditto with high-end motorcycles, private jets over $ 1 million, pleasure boats, drinks like champagne, whiskey, spirits and wines priced over $ 50 per liter, the caviar, pearls, diamonds and others. precious stones.

More important in economic terms is the second part of the BCRA resolution: it imposed on importers of finished products a wide range of products, such as washing machines, dishwashers, refrigerators, electric ovens, microwaves, other appliances. , motorcycles fully or partially assembled, Sowers, harvesters, among others, must wait 90 days to buy the dollars on the official market, with which they must also seek their own financing for these imports.

The official estimate is that the Central Bank will save around $ 300 million this year due to lower purchases of luxury goods., with high-end cars and motorcycles first. The discouragement of imports of finished products will generate a much greater relief: between 3 and 3.5 billion dollars in the year.

To prevent importers from seeking dollars for these purchases on alternative markets, they are prevented from operating in cash or in EU dollars.

“What is being done is managing the payments from the external sector to build a bridge until the summer passes, when there is less currency, and a reasonable deal can be reached with the IMF. It is essential to have this intelligent management of currencies, rewarding exports, especially those that generate more added value, and saving dollars for essential imports, such as those of industry, ”analyzes the former president of the Bank. central, Alejandro Vanoli.

The other aspect targeted by the measure is the protection of local production against imported competition.. The economic firm has observed a surge in purchases of luxury goods and finished goods abroad, despite the fact that in the latter case there is installed capacity in the country to meet this demand at comparable prices.

“The richest, in possession of dollars, have incredible purchasing power, with financial dollars at 145 pesos. The import of premium cars was skyrocketing. It was an indicator that something had to be done, ”they describe the process that led to the Centrale’s resolution.

Trying to reverse this situation is a clear sign of the direction of economic policy. In the Cambiemos government, on the contrary, barriers to entry of imports were lifted and it was considered that there were disposable articles of manufacture..

The reaction from the opposition, orthodox economists and related media sectors has been to warn that there will be a shortage of refrigerators, microwaves, washing machines and other products, and that little products available in domestic production will be expensive and bad.

The government rejects it. He gives as an example what is happening in the automotive industry, where Toyota has achieved 40% integration of its vehicles with domestic parts and parts, and other terminals, such as General Motors and Renault, n ‘not achieve 20% use of local components. . They are all competitive, but for the country, one model increases job creation and improves the monetary equation, and the other primarily serves the interests of multinationals.

An additional benefit of the central bank’s exchange rate measure is that it avoids vetoes or refusals from the World Trade Organization.. The agency cannot comment on the issue as it is a currency management issue and cannot be viewed as a tariff or para-tariff measure.

In this sense, the Central Bank is also seeking to neutralize speculative maneuvers such as the rise in imports in times of stress with the dollar, which end up fueling the races.

The exchange rate peace achieved since November, with the recovery of foreign currency deposits from the private sector and an increase in reserves of nearly $ 900 million, is a battle won by the government, but officials themselves admit that pressure from devaluation sectors can reappear at any time. and with any excuse. Therefore, the Central Bank and the executive branch decided to move forward with stronger controls and regulations so that the state has more tools to defend against speculative attacks.

The brake on corn exports, which forced negotiations with exporters and producers who were withholding grain to supply domestic production of chickens, pigs, cows, dairy farms and eggs, is another example of state intervention. which seeks to disrupt the maneuvers that affect popular pockets.

The success or failure of economic policy to consolidate a project of productive growth with social inclusion will depend on the result of each of these showdowns.