Last Wednesday, June 5, Fausto Spotorno, a prominent economist and member of the Advisory Council of President Javier Milei, visited the capital of Entre Ríos. Invited by the Social Security System of the Professional Council of Economic Sciences of Entre Ríos (Cpceer), Spotorno gave a talk in the Aula Magna of the Argentine Catholic University (UCA) of Paraná, where he explained “the steps that follow” in the economy Argentina.
Analysis of the current economic situation
In an interview with Dos Florines, the director of the Orlando Ferreres y Asociados Study Center, analyzed the challenges facing the central administration. He stressed that one of the key issues for the second semester is the exit from the exchange rate. According to Spotorno, the recovery of the economy will depend on this variable, since it is essential to attract investments and get out of the recession.
“Inflation is the most important problem that the Government is addressing,” he stated. He explained that, although measures to control inflation have recessionary effects on families and businesses, he hopes that economic activity will rebound soon. However, he warned of the challenges that will be faced by those sectors that do not adapt to the changes.
Advice to the president
When asked about his role in the Advisory Council, Spotorno clarified that the Council does not intervene directly in the Government’s economic policy. “Our role is completely different. The idea of the Council is to have a group of people who operate in the real life of Argentina and can give their opinion on where the economy and the world are going,” he explained.
The Council focuses on long-term issues, such as artificial intelligence and energy challenges, without interfering in the immediate macroeconomic decisions made by public officials.
Expectations for the second semester
Spotorno considers that the second semester will be crucial, highlighting the importance of exiting the exchange rate to reactivate the economy. He pointed out that no recession in Argentina has lasted more than ten months of continuous decline and that a rebound in economic activity is expected. However, he warned that to achieve sustained growth, it is necessary to attract investments, reduce inflation and organize public accounts.
Central Bank Challenges
The economist stressed the importance of having an operational Central Bank to be able to escape the exchange rate trap. He stated that although the Central Bank is currently in a complicated situation, it is essential to control the exchange rate and the interest rate. “You need a minimally operational Central Bank to get out of the trap,” he pointed out.
Impact of inflation and credit
Spotorno acknowledged that inflation remains high by international standards and that its reduction will be a gradual and difficult process. Furthermore, he highlighted that credit could be a factor in economic reactivation, although he warned that deeper macroeconomic reorganizations are required.
Economic sectors and recession
Regarding the sectors most affected by the recession, Spotorno mentioned that sectors such as mining, agriculture, oil and energy have great growth potential. However, construction and industry will face significant challenges and will need to adapt to new economic conditions.
Finally, Spotorno stressed that the success of the Government’s economic program will depend largely on the political climate. “If the economic program goes well despite the political situation, it will be a point in favor for the Government. But if the reforms are hindered, it could be a serious problem,” he concluded.
