The tours Shopping abroad became fashionable again. Although many ventured to Chile in search of cheap electronic products, another destination was once again on the radar of Argentine businessmen: China. Dozens of them traveled in recent weeks to the gigantic Canton Fair, considered the largest in the world and a true mecca for importers.
Those who attended this mega commercial event (which actually takes place several times a year and at the beginning of May was dedicated to the textile sector) were surprised by the number of colleagues, competitors and Argentine suppliers who walked the aisles among thousands of stalls. Everyone’s objective is the same: to accelerate the purchase of Chinese products and leave everything ready to bring them to Argentina as soon as economic conditions allow it.
“Most of us had not come to China since 2019. Then came the pandemic and later the import restrictions. Now is the time to resume contacts with suppliers that had been lost to some extent,” explained a businessman in the textile sector.
A new wave of imports is just around the corner. There is not a single reason, but there are many that come together to make it happen. Firstly, it was the Government itself that announced that it would no longer be necessary to ask for permission to enter products from abroad. A few days after assuming Javier Milei, it was decided to cancel the disastrous SIRA import permit scheme. The scheme used during the last Kirchner administration would have been one of the main vehicles of corruption and collection of the previous government. For now, Justice has not moved forward with its investigations.
After five years, companies once again looked at China as a major supplier of imports. The pandemic had suspended travel and the obstacles imposed by Kirchnerism had generated complications. The signal of greater openness and the cheap dollar make it more convenient to bring finished products than to assemble locally
In practice, imports remain relatively hindered. Companies must pay their suppliers in four monthly installments, but it is not always easy to obtain that financing. Since mid-April, the scheme has been made more flexible exclusively for SMEs, which can withdraw 100% of the funds after 30 days.
In addition to the Government’s decision to favor trade opening, there are other causes with the lowering of the exchange rate. This phenomenon discourages exporters but the flip side is that it makes the entry of merchandise from abroad cheaper.
Retail chains that sell appliances, household items, furniture, mattresses and other products also took note of the new scenario. The majority are already thinking about a “mix” of purchasing national and imported products. Not only do they buy cheaper abroad, but it also serves to pressure local manufacturers to lower prices and once again offer attractive financing options.
In addition to this, the Government also moved forward with the reduction of food tariffs to accelerate the reduction in prices, but now it also added ice cream makers, washing machines and plastic supplies.
In the Argentine Industrial Union, all the alarm lights went on in the face of a panorama that clearly harms the interests of the companies that make it up. After this week’s Board of Directors meeting, the entity indicated that now is not the time to reduce tariffs and favor imports. “This should occur in line with improvements in the macroeconomy, reductions in tax pressure and recovery of economic activity,” also referring to “unfair competition from Asia.”
The sector faces the perfect storm. While sales of some sectors such as cars and motorcycles began to rebound in April compared to March, the industry continued to show sharp declines (6.3%). This is explained by the decrease in sales, but also by the large accumulation of stocks that occurred last year, in response to the search for protection against the devaluation that was approaching and finally occurred in December. The warehouses are full of merchandise that will surely not be sold even throughout 2024.
The Argentine industry is going through a true perfect storm. Not only will it have to compete with imported products that cost much less, but also the companies that buy have a lot of accumulated stock from last year and can reach 2025 with peace of mind. It is expected that activity levels in the sector will continue to collapse in the coming months
Own Javier Milei He had recognized last week that Argentina became more expensive in dollars. But he considered it a logical question taking into account the fiscal surplus achieved in the first months of the year, the drop in inflation and the better expectations. The President flatly ruled out an increase in the monthly adjustment rate of the official dollar (2%) and recognized that to gain competitiveness it is necessary to lower the tax burden on companies, to some extent the same position of the UIA.
While the rebound is expected to consolidate, after some positive data that was released in April, inflation continues in full downward trend. The index released by the city of Buenos Aires showed. 9.8% last month, but in food the slowdown was much stronger, up to 5.1%.
The weekly survey of Econometrica, whose director is Ramiro Castiñeira, measured a 1.2% increase in the food sector in the first week of May, but an accumulated increase of only 3% in the last four weeks. The inflationary deceleration is already surprising for its speed, although some believe – as is the case of Sunday Cavallo– that it will be difficult to break the 5% monthly floor.
The reduction in inflation and the excess liquidity of banks (which now no longer have as much demand for financing from the State) is accelerating the time for credit to reappear. A clear example of this is related to the new lines of mortgage loans that were offered by both public and private entities. It is expected that the rebound that the real estate sector was already experiencing since the beginning of the year will be consolidated. It would also be logical for the value of the square meter in dollars to increase due to the greater demand for real estate.
The most favorable data that the Government can continue to show is the fall in inflation, with food that would already be rising at a rate of only 3% per month. For now salaries are not rising. In March they increased less than prices, but this is expected to change after the release of April numbers.
He Hot Sale It will also arrive with strong discounts to encourage demand, something that will clearly differentiate this online shopping proposal from the one carried out last year. But above all, it will also mark the reappearance of credit to buy, through 12 and up to 18 interest-free installments in many of the promotions. It is a favorite product of Argentines that had disappeared amid the uncertainty and the strong inflationary jump.
The rebound in country risk is possibly the most worrying data from a financial perspective and marks a brake on the downward trend of recent months. The road to Argentina’s return to the financial markets is still full of obstacles.
The difficulties that the Government faces in approving the Bases law in the Senate are undoubtedly a wake-up call for investors, who were excited by the half-sanction in Deputies. But at this point it already seems a fact that the project could suffer not one, but several modifications in the Upper House, forcing it to return to Deputies. This noise coming from politics is not indifferent to investors.
But a series of conflicts arose for the Government beyond the confrontation with the unions over the general strike on Thursday. In addition, the fights with prepaid companies continue, industrialists are already beginning to raise objections to the “model” and energy companies objected to the payment in bonds until 2038 that the Government wants to make to cancel Cammesa’s debt.
The government continues the fight with prepaid companies, industrialists raise objections to the “Model” and energy companies objected to payment in bonds
The latest political and social mood report prepared by the consulting firm D’Alessio-Berensztein also marked some worrying trend changes for the Government in April. For now, the number of people who think that in a year the economy will be worse than now has increased by 7 points.
But there is another fact about the image of political leaders that did not go unnoticed by the business world: the positive image of Axel Kicillof, governor of the province of Buenos Aires, grew strongly in the last measurement, going from 31% to 37%. Although he has a very high negative image, in just one month he fell eight points from 64% to 56%. Thus, he consolidates himself as the opposition leader with the most possibilities of confronting the Government, which would also explain the distance he has been taking from both La Cámpora as well as the “political mother” herself, Cristina Kirchner.
