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ARGENTINA | 19-10-2023 15:21

Tense election week: shortages, pre-emptive increases and dollarised prices

A few days away from the presidential election, devaluation fears are spreading.

A few days away from the presidential election, the supply of supermarket shelves and even factories has “slowed down.” Businessmen have used these words behind closed doors, as they start to deal with a shortage of raw materials for production or a slowdown in pending deliveries. Without breaking the supply chain, the lack of willingness to give final prices and shortages of supply have multiplied since the start of the run on the peso last week, and it is still the case in election week, despite the relative tranquility on parallel foreign exchange markets.

Business sources consulted by Perfil for this article confirmed that “the lack of deliveries of goods has been consistent over the last few days.” But they warn that “if alternatives are sought, products or supplies can be obtained to prevent production from being halted.” They admit that “getting spare parts or intermediate goods has become extra work, with no actual price”.

Expectations for post-election devaluation are “high” in the business world. “Nobody wants to sell until after Monday and then see what happens. Such is the speculation,” said the owner of an industrial firm, which produces essentials. “The pressure on alternative dollars only has one outcome, an ultimate devaluation,” another business owner added.

“I’m selling, because we can’t stop doing that, but it’s true that there are many sectors and fields which aren’t selling and accumulating stock, because they don’t know what’s going to happen, especially those with a dollar value,” the boss of a small- and medium-sized producer  with over 60 employees admitted, They cannot halt production. Consumption has begun to weaken given the loss of purchasing power from the impact of inflation.

A few days away from the election, business entities have started to weigh the claims of their territorial, sector and individual partners, wgho are suffering from frozen imports and the higher trading debt in dollars, as well as the government’s malaise, trying to give answers little by little while fighting the soaring parallel dollars. “We can’t be silent, but we also have to be prudent and not politicise claims,” one of the members of the inner circle of the UIA Argentine Industrial Union said in an interview.

Last Tuesday, the UIA's board, comprising the top leaders from provinces and production sectors, flocked to the Petiribí hall at the industrial entity's headquarters in Buenos Aires for a key meeting. The only matter up for debate there were import authorisations and the payment of debts. The press release released afterwars was repetitive, with a desperate plea for new dollars. “It's a disaster, but they won’t solve anything now,” an industrial said with “flat” SIRA official import authorisations.

“Anyone selling to you does so at twice the actual value. Iron is much more expensive, steel mills are not selling anything, or at best with an open delivery note. It happened to me with some materials I bought, which I’ll have to pay at the post-election dollar value”, the owner of an iron and steel company, who asked to stay off the record, confessed.

This was also confirmed by an industrial reporting to the UIA: “everyone is covering up somehow. Some with the price; others by not delivering; the others by negotiating the term, in case of devaluation; or agreeing the payment at the dollar value at the time of the payment. It’s all a big mess”.

Without a specific report, businessmen have started to see a drop in consumption and activity in their day-to-day. Initially, “a shift in purchases was noted, with drops of up to 30 percent in name Brand products, although offset by lower quality alternatives”, a source from the private sector pointed out. An example is the sustained consumption of liquid milk, distributed among different brands; or the rise in the sale of rice and noodles, for a lower price or due to stock capacity. “There are products still at good prices, but others have climbed while awaiting a devaluation. Today (on Wednesday) I paid flour with a 100-percent increase”, the owner of a food SME admitted.

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Ariel Maciel

Ariel Maciel

Editor de Economía Política en Perfil.com - Mail: [email protected]

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