The economist and consultant rules out hyperinflation due to the parate of the economy. “We are in a gringo level of activity,” he says.
Carlos Melconian, one of the City’s most listened to economists and companies, once again expressed his concern about how this global “tsunami” will affect Argentina due to the coronavirus pandemic.
While you don’t see one hyperinflation (Despite the fact that the monetary issue can grow 100%), he believes that the economy will fall at least 6% and that the economic program went from seeking to “calm the economy” to “anything goes”.
“What is coming is spending, saving the private sector and issuing in a crazy way, and there are other macro transmission mechanisms in the midst of the catastrophe”, slide “Melco”.
The key, he says, will be the duration of the health emergency. “It is not the same to carry out anti-cyclical policy for three or six months as to deal with unemployment for a year or two,” he warns.
The second key is that it will pass when the emergency passes, the countercyclical policies are reversed and do not become permanent (as was done in 2010/2011 after the 2009 international financial emergency).
Be that as it may, Melconian imagine the way out of this crisis in a “U” shape. “Here it will be a birth, it will be to rebuild an economy based on the emergency. It will be an exit from Alcatraz to return to Devotee,” he said.
“We are in a gringo level of activity,” added Melconian, referring to the situation in North America.
And he stressed that you have to change the chip of the “worth everything” fiscal and monetary on time and effectively and comprehensively. “Historically in Argentina the excesses of the fiscal deficit and issuance are corrected with inflationary liquefaction, with adjustment and orthodoxy“he finished.
The concepts were presented in a videoconference organized by Balanz Capital, which took place on Wednesday and also on Thursday. In the second function, which had more than 3,000 people online to listen to Melconian, the former National Bank He stated that currently the world and Argentina are “trying to evaluate a pineapple, a real tsunami”.
Melconian stressed that all the risks of the previous program are being triggered: debt, gap, trade surplus, issue. But they come to the background amid the collapse.
When asked questions, the economist reaffirmed that he does not see hyperinflation despite the mega-issue and the growing fiscal deficit.
Can you avoid post-quarantine acceleration? He wondered. “The mega-monetary issue that the quarantine imposed (which can reach 100% in the year) is an inflationary risk factor in Argentina. Pure monetarists consider it a fait accompli. And the heterodox underestimate it.“he warns.
But Melconian cautions that mega-emission does not necessarily have to be synonymous with hyper. “But it is a factor of inflationary acceleration,” he remarks.
And it maintains that in the conjuncture, the colpaso of the activity puts a brake to the rise in prices. The latent risk Melconian sees is that supply and supply problems occur.
Which are the main moderating factors of the inflationary acceleration? It lists:
-Own economic paralysis
-The very strong fall in wages real
-The freezing of public rates
-Pricing controls and regulations
Regarding exchange rate policy, Melconian believes that the intention not to delay the dollar will be confirmed.
He says that there will be accompaniment of the official dollar to the general weakening of world currencies. In addition, automatic downward adjustment of demand for tourism and import dollars.
The “friend” economist of Mauricio Macri predicts a rise in the exchange gap initially but with less inflationary impact.
When speaking of the debt, he predicts a closure at the tap of the issuance of pesos for the payment of the debt in that currency.
Regarding the international exchange, he says that the deadline is May 24 when the Bonar 24 must be paid. There will surely be an offer to the bondholders that is believed to be unilateral.
Although you believe that there are greater chances of default. “Isn’t it convenient for you to pay and not go to the courts of NY? he asked himself, without giving the answer.
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