Argentine Businesses Eye 3 Variables as Key to 2022 Growth

Bloomberg Línea talked to private sector players in the country about their forecasts for this year

However, they are wary of certain variables on which growth will depend.
By Belén Escobar (EN)
February 07, 2022 | 02:30 PM

Buenos Aires — With the progress made in the country’s vaccination campaign, economic recovery during the past year and the recent new agreement with the International Monetary Fund (IMF), Argentine business leaders agree that expectations for 2022 are encouraging, but warn that three variables will be key to achieving growth in both their businesses and the wider economy after a decade of low growth figures.

“This year starts with many challenges for the Argentine economy. The base is positive because economic activity grew more than expected,” José Urtubey, director of Celulosa Argentina, said. “In 2022 we will grow three points compared to last year.”

The agreement in principle with the IMF is undoubtedly a great step forward to continue balancing the macroeconomy, and I expect, due to the fact that there is a strong consensus across different sectors, that it will be possible to reach a good conclusion with the formalization of the negotiations. This will provide a good projection for the coming years,” he added.

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When asked by Bloomberg Línea about the challenges for this year, he pointed to the need for a favorable framework for the generation of employment, a climate for investment, and to define the future of energy in order to avoid problems with supply.

Read More: What’s Next for Argentina after the Agreement with the IMF

#1 Jobs

For his part, the president of Toyota Argentina, Daniel Herrero, said the aim for 2022 is “to continue growing, beyond the challenges that remain on the horizon”. “We decided to increase production capacity by 20% at our industrial plant at Zárate, where we assemble the Hilux and SW4″, he said.

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Read More: Latin America’s Job Market Will Take Years to Recover From Covid

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“We see a growing interest throughout the region for these models, and also in Argentina. The automotive industry is an engine of growth and development for our country, and we believe that agreements such as the ones we reached to increase exports show a possible path for recovery,” Herrero said.

However, he added that “the country needs to reach some basic consensus to start generating employment and grow in a sustainable way”.

“Balanced fiscal accounts, excessive tax pressure, persistent inflation, inadequate labor framework and omnipresent bureaucracy are some of the many obstacles faced by Argentine companies,” according to Natalio Mario Grinman, president of the Argentine Chamber of Commerce and Services.

He said that “it is necessary to remove [those obstacles] so that existing companies can expand and new ones can be created”.

Only in this way will we generate quality employment and improve social indicators”, he warned.

And for Marcelo Fernández, president of the Argentina’s Business Confederation CGERA, the sector needs to “urgently generate skilled labor”.

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“We are willing to offer our facilities so that people appear, a teacher is paid and people can be quickly hired, in order to continue with the virtuous circle of growth, which was seen very strong in the last quarter of 2021,″ he added.

#2 Investment

According to Grinman, “in order to reduce poverty, wealth must be created, and it is the private sector that can generate it”, and he said that, “for this to happen, it is necessary to create the right conditions, that is to say, a business climate”.

“As the economy expands, consumption is boosted, and this favors trade and services; the opposite happens in times of contraction”, he explained.

Our country has multiple challenges that need to be faced if we want to experience a true development process,” he said.

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Daniel Rosato, president of the country’s small and medium-sized business association Industriales Pymes Argentinos, said: “We have an important projection for 2022 in terms of the development and growth of diverse sectors of industry,” pointing to the oil and gas sector as an example.

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“One of the most important sectors is hydrocarbons, where the oil sector has interesting investment projections that will generate jobs for the entire industrial SME segment,” Rosato said.

Read More: Buenos Aires Scores Highest in LatAm on UN’s City Prosperity Index

#3 Energy

Rosato also pointed to the importance of the energy sector in spurring the country’s growth.

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“We have the energy. The problem is transportation, distribution. There are many sectors with problems due to an increase in consumption. There are problems with outages and drops in voltage,” he warned.

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He said that, due to rising energy demand, “new cables must be laid and energy companies must make the corresponding investments to guarantee the greatest possible production”.

He called on companies in the sector to carry out investment, as “the increase in industrial activity will translate into higher energy consumption”.

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