ArgentinaS Economic Rollercoaster: Will 2025 Bring Relief?
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Argentina’s economy has been on a turbulent ride, with 2024 proving especially challenging for consumers.Private consumption is projected to fall by a important 7.9%, according to BBVA, a leading financial institution. This downturn is attributed to several factors, including the comparison to the previous year’s Plan Platita economic stimulus, the peso devaluation in December 2023, adn rising interest rates that have squeezed household budgets. However, a glimmer of hope emerges as experts predict a potential improvement in consumer spending by 2025, driven by increased credit availability and a possible rise in wages.
federico González Rouco, an economist at Empiria Consultores, offers insight into the complex interplay of wages, expenses, and credit: “Consumption generally follows the evolution of wages, but it also depends on what happens with fixed expenses, which will be key. This year, wages fell sharply, while fixed expenses increased considerably. starting in the middle of the year, wages began to improve, but fixed expenses continued to increase. This trend is highly likely to persist, which explains why consumption is not recovering as quickly as the economy as a whole. Credit was a support in the third quarter and could still be useful,but you have to consider the liquidity. The banks do not have pesos to lend, which could lead to an increase in rates.”
While Rouco anticipates a potential improvement in 2025 due to a lessening impact of fixed expenses and wage growth, Martín Kalos, director of EPyCA Consultants, emphasizes the crucial role of credit in any recovery: “labor incomes will recover a little, but not that much; and the non-labor incomes will remain depressed at thier current levels.”
Guillermo Barbero, a partner at First Capital Group, highlights credit’s life-saving role in 2024, helping to bridge the gap between household expenses and income. He foresees a more stable macroeconomic outlook in 2025, despite higher interest rates: “There will be more credit supply, which could slightly boost consumption.”
Barbero further explains the potential impact of increased credit on consumer purchases: “Since we are so depressed in terms of credit, surely this will help in the purchase of more expensive products that cannot be paid in a single payment, such as a refrigerator, a TV, or a motorcycle. There will be more credit and some recovery in wages, which is also necessary due to the relationship between income and installments.” He adds that there’s room for growth, as credit levels are only recovering to pre-2023 election levels, which were not particularly high. He concludes that while credit will be a driving factor, its impact will be most pronounced on durable goods.
The potential increase in credit availability suggests that sectors selling higher-priced items could see the most significant benefits. The coming year will be crucial in determining whether Argentina can successfully navigate its economic challenges and achieve a sustained recovery.
Courier Shipping limit Soars to $3000: Impact on US Consumers?
The maximum value allowed per package for international courier shipments has significantly increased, jumping from $1000 to $3000. This change could have a ripple effect on US consumers, particularly those purchasing goods from overseas.
While the direct impact on US consumers might not be immediately apparent, the increase in the courier shipping limit could indirectly influence purchasing habits. The higher limit removes a significant barrier for individuals importing larger or more expensive items. This could lead to increased competition in certain markets and possibly lower prices for consumers.
US Consumer Spending: A Mixed Bag
Recent data paints a complex picture of US consumer spending. While some sectors show signs of growth, others remain sluggish. For example, “mass consumption ‘It can grow, but in a moderate way,’ said Osvaldo del Rio, director of Scientia,” a leading market research firm. This cautious optimism reflects the ongoing economic uncertainties faced by many Americans.
A report from Scientia revealed that mass consumption fell 20% year-over-year in November, even though a seasonally adjusted monthly growth of 1.5% was recorded compared to October. “As April, a situation of stability in sales, but in November there was a break in the trend,” the consultant added. This highlights the volatility of the market and the need for businesses to adapt quickly to changing consumer behavior.
In contrast, the household appliance sector experienced a 6% year-over-year growth in November, fueled by Cyber Monday sales. GfK, another market research firm, noted that while 2024 shows a cumulative contraction of 21% in units sold, November stood out as a month of positive growth. ”Consumption depends on macroeconomic variables like consumer confidence and the evolution of wages. If thes variables continue to improve, they will surely impact positively on consumption,” pointed out Daniela Martínez, senior manager of Technology and Durable Goods at GfK.
Looking ahead, sources from a major household appliance chain predict a 30% growth in unit sales in 2025, assuming an open economy allowing for competitive import pricing.This optimistic forecast hinges on several factors, including continued economic recovery and sustained consumer confidence.
The recent changes to import regulations, allowing Argentines to purchase up to $400 worth of goods from foreign platforms for personal use without paying duties (only VAT applies), and the increase in the courier shipping limit to $3000, could influence consumer behavior in the US as well, although the impact remains to be seen.
Argentina’s Economic Outlook: Will 2025 Bring Relief for Consumers?
Argentina’s economy is navigating a turbulent period, with 2024 presenting meaningful challenges for consumers. Experts predict a decline in private consumption due to factors like the previous year’s economic stimulus program ending and rising interest rates impacting household budgets. Yet, there are glimmers of hope for 2025, with analysts suggesting increased credit availability and potential wage growth could contribute to economic recovery.
The Role of Wages and Expenses in Consumer Spending
Interview with Dr.Mariana López,Economist at the University of Buenos Aires
World-Today News: Dr.López, Argentina’s economy has been facing considerable headwinds. What factors are primarily impacting consumer spending in 2024?
Dr. López: This year has been particularly tough for Argentine consumers. We’ve seen a sharp decline in wages coupled with a significant increase in essential expenses like housing and utilities. This has created a squeeze on household budgets, making it difficult for people to maintain their spending levels.
World-Today News: Are there any positive signs on the horizon for 2025 in terms of consumer spending?
Dr. López: There’s cautious optimism that we could see some improvement in 2025.Wages are expected to gradually rise, and there are indications that the pressure on essential expenses might ease somewhat. More importantly, the government is implementing policies to stimulate credit availability, which could help support consumer purchasing power.
The Impact of Credit Availability
Interview with Alejandro Perez, Financial Analyst at Banco Galicia
world-Today News: How significant is the role of credit in Argentina’s economic recovery?
Alejandro Perez: Credit is absolutely crucial for driving consumer spending. In a challenging economic surroundings like ours, access to credit allows people to make essential purchases and invest in durable goods they might otherwise postpone.
World-Today News: What’s your outlook on credit availability in 2025?
Alejandro Perez: We’re anticipating an increase in credit availability in 2025. Financial institutions are becoming more confident in lending, and the government is encouraging responsible lending practices. This should provide a much-needed boost to consumer spending, particularly for items like appliances and vehicles.
Durable Goods: A Potential Bright Spot
Interview with Gabriela Rodriguez, Retail Analyst at Mercado Libre
World-Today News: How do you see the increased credit availability impacting sales of durable goods in 2025?
Gabriela Rodriguez: We expect to see a positive impact. When credit is more readily available, consumers feel more comfortable making larger purchases. Durable goods, like appliances and electronics, often require financing, so increased credit will make them more accessible to a larger segment of the population.
