The economy would stop falling but it is far from recovering

The economy would stop falling but it is far from recovering
The economy would stop falling but it is far from recovering

The Finance Research Center (CIF) of the Business School of the Torcuato Di Tella University reported that the Leading Index (ILCIF) grew 4.90% in April compared to the previous month. Although in year-on-year terms it falls 13.34%, the curve seems to suggest a turning point in the recession.

The ILCF had anticipated in February 2022 the economic contraction that the Indec Monthly Estimator recorded since June of that year. While the EMAE seems to be looking for a floor in February of this year, the UTDT indicator shows a curve of slight recovery, even in a recessive cycle.

Martín González Rozada, Researcher at the UTDT Finance Research Center, explained that the ILCIF “seeks to anticipate trend changes in the economic cycle” and “grows 4.90% in its seasonally adjusted version during May 2024.” However, the trend-cycle series (concentrated on long-term movements) falls 0.75%,” added the specialist.

The ILCIF is constructed to summarize and reveal the turning points in the level of economic activity represented by the Monthly Economic Activity Estimator (EMAE) “in a clearer and more convincing way than each of its components because it smoothes out the volatilities inherent to each one of them”. Its components are the General Stock Market Index (IGBC); the Merval Argentina; the monetary aggregate M1 (total), the collection of the Value Added Tax (in all cases, deflected by the consumer price index), e The official FOB price of soybeans (dollars per ton), car sales to dealers ; the dispatch of cement to the domestic market, the Consumer Confidence Index (ICC) Industrial Production Index (IPI-FIEL) for non-metallic minerals and the IPI-FIEL for steel industry.

“The Diffusion Index (IDCIF) is at 80%. This means that of the series that make up the IL, eight present significant positive variations.” In any case, he states that “the probability of exiting the recessionary phase in the coming months is 1.96%.”

The Diffusion Index reports the proportion of series that grew in a given month, and indicates how widespread an increase or fall in the ILCIF is among the different sectors or economic aggregates. For its construction, the number of series, previously seasonally adjusted, that had a monthly growth of less than 0.05% is added, those that had zero growth (between 0 and 0.05%) add up to 0.5, and those that fell They don’t add up. The result is divided by the total number of component series of the ILCIF.

It should be remembered that in March, the monthly economic activity estimator (EMAE) recorded a drop of 8.4% compared to the same month in 2023. The seasonally adjusted indicator decreased 1.4% and the trend-cycle indicator decreased by 0.5 %, both compared to the previous month. The April data will be released at the end of this month.

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