Incoming data suggest there are incongruities almost everywhere. There is no way so many jobs could be created in a business world surrounded by so many uncertainties. Indeed, industrial production figures don’t square with employment data. Inflation is another conundrum. The real issue isn’t whether inflation is about two times higher than the official print. The real issues are threefold: first is the inflation low income groups –the majority- face is higher than the official print? Second, is producers’ inflation much higher than the consumer inflation? Indeed, it is almost the double, and that reflects cost pressure as well as potentially much higher a consumer inflation waiting around the corner. Third, what does people ‘perceive’ about inflation? Do they think it is double the official print? Because perceptions count more than facts, and this is a fact politicians know only too well. Answer: yes, yes and yes. Furthermore, dollarization can’t come to a halt anytime soon because people think the exchange rate isn’t in equilibrium. Overseas investors continue to sell, and the current account deficit may not fall as drastically as envisioned a few months ago. Absent strong tourism revenues, reserves would be depleted to finance the deficit, but there are only gross reserves, the net being deeply in negative territory. Yes, a few billion dollars current account deficit can still be funded via reserve depletion, as it happened last month, but larger deficits would pose a problem. The perhaps only short-term good thing is the corporate sector’s net FX liabilities have fallen last year. They are net payers to the outside world. This is good because everybody else has incurred larger FX debts over the last three years. At least the private sector is in better shape.
When would elections be held?
Almost all actors tend to believe everything hangs by a thin tread. Because there is no way to sugar-coat all these economic realities and the risks they engender and because people at large are aware of them –they should know how they fare in the market better than anyone, shouldn’t they? – snap elections are continually postponed. The time isn’t ripe for an incumbent party to rush to elections. Can early elections be held this autumn? Well, yes and no. Who knows? Anything can happen anytime.
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