President Mauricio Macri said last Thursday that “the time has come to put the focus on growth.” He did so after several announcements to favor the regional economies and in the context of a resounding fall in industrial production, consumption and investment. A day earlier, in a radio report, he said that inflation was going down. On Thursday afternoon, the INDEC denied it with a resounding 2.9% increase in prices in January. An increase driven by food, one of those goods that economists define as “inelastic”, since it is more difficult to escape food than to the cinema, for example, and for services and rates, an item that falls under the official orbit.

All this, in addition, in a moment that some economists of the bar optimists define as “financial summers”, since with the price of the dollar quite controlled and the rates in a very soft downward trend, a certain calm in the financial and exchange scenario, the great official obsession.

However, the bar of the pessimists observes that the situation is much more labile and should be celebrated just with a glass of fresh water. A test: the slight rise in the dollar in the last hours of last week stopped the drop in fees that the Central Bank was implementing in a dropper. And the question, of course, is whether this summer calm will come until spring, October more precisely (see page 4).

As a sign of the times, in the midst of the investment drought, the Government hopes that the promise of a former official very close to the President will be fulfilled: in May, it will be confirmed by Morgan Stanley that Argentina leaves the country status of ” border “to return to being an” emerging “, a decision announced last year that requires the patient twelve months of observation. This would allow a group of investment funds to land in the country to take advantage of some asset liquidation prices left by the devaluation, and the subsequent effects, of last year. The doubt, in this case is whether it will be just financial investments or yes, in addition, there will be some bet for the production. In any case, the expected amount would be around US $ 5,000 million, perhaps a little more. It does not look like much, but in the current situation it’s like a flood in the desert.

Hardly a rebound in the trade balance, the result of the strong recession induced by official measures, and enhanced by the “management? of the monetary and exchange variables in 2018 (see page 6), allows the Government to insist that there are possibilities to think that a slight recovery of activity is feasible from the second quarter of the year. The key sectors to lead the recovery would be, for the Government, agriculture and energy, two items with a relatively limited multiplier effect.

The zero deficit policy not only has one face associated with a very severe adjustment. But, in addition, it is reflected in a typical paradox: the fall in the level of activity is also reflected in the fall in tax collection, notorious in the items related to consumption. The explanation does not admit a counter test: in 2018, the salaries of the formal economy rose 30.6% on average, while prices did so by 47.6%.

Another test: in January the collection without retentions grew 35.4% year-on-year, more than 10 points below inflation. And the expense is only controlled in items linked, almost exclusively, to production, especially public works. However, the bulk of public expenditures are linked to inflexible items to the downside, such as official salaries, retirement or social plans, which, in addition, are already quite deteriorated.

On the other hand, the crisis in the industry and commerce, as well as the wage delay, put more questions to the payment of Profits, the great annual harvest of the AFIP.

Going forward, nobody really knows if the mood of the people will weigh more the price of the dollar or the rise in prices that will intensify at least until May-June due to the increase in tariffs. Will it be necessary to choose between the dollar or inflation? The elections have already begun.